Oral Answers to Questions

WORK AND PENSIONS

The Secretary of State was asked—

Credit Unions

Katy Clark: What steps his Department is taking to support the work of credit unions.

James Plaskitt: Via the growth fund, we are investing £42 million over three years in more than 120 credit unions and community development finance institutions. To date, more than 40,000 affordable loans worth a total of £20 million have been made, and as a result thousands of people have been prevented from falling into the clutches of high-cost lenders or loan sharks.

Katy Clark: I am grateful to the Minister for his reply. He will be aware of the socially responsible work that credit unions carry out, but he will also be aware that the credit union movement feels that the current legislative framework is stunting its growth, and he will be aware that there are far higher levels of credit union membership in other countries, such as Ireland. What steps is he considering taking to update the law governing credit unions?

James Plaskitt: First, I should point out that the growth fund investment that my Department is making is the first ever substantial investment by Government in the credit union movement, and my hon. Friend will know of the First Alliance credit union in Ayrshire which is benefiting from growth fund money. My Department is looking in conjunction with the Treasury at the legislative and regulatory rules that affect credit unions, and I am sure that colleagues in that Department will have more to say about that in future.

John Grogan: Does my hon. Friend agree that it is important that credit unions are not just an urban phenomenon, but that they also offer savings and loan opportunities in rural areas? Will he commend the work of North Yorkshire county council, which on 4 December will consider a business plan drawn up in association with local housing associations to expand the common bond of the York credit union to the whole of North Yorkshire so that credit union facilities will be available in the whole of the county of Yorkshire?

James Plaskitt: I agree with my hon. Friend, and I can tell him that no fewer than 11 credit unions in Yorkshire are benefiting from the investment that the Government are putting in through the growth fund. We have found that in many areas a number of small credit unions have come together to collaborate and pursue a bid for growth fund money. That has been especially effective for credit unions that cover rural areas. My hon. Friend is right that such amalgamations must take place if we are to get wider coverage on behalf of credit unions, and that is precisely the sort of thing that growth fund investment has encouraged.

Tom Levitt: I am grateful to my hon. Friend the Minister for his answers. Obviously, the people who benefit most from credit unions are those at most risk from loan sharks and least able to look after themselves in this respect. Will my hon. Friend clarify the situation with regard to the funding he mentioned in his first answer? Is that just for expanding existing credit unions, or are there facilities for creating new credit unions from scratch, and where should people go if they want assistance in, or advice on, starting a credit union?

James Plaskitt: The growth fund money is being used in a number of ways. Some of it is expanding the capitalisation of credit unions—it is having a substantial impact in that respect. As I said, a number of credit unions have amalgamated or brought collaborative deals to us in order to bid for the growth fund. Some of the money is also available to assist in training and development for those who work in credit unions—both full-time staff and volunteers, who play an important role.

Speech Impediments (Young People)

Helen Jones: What assistance is available to help young people with speech impediments to gain employment.

Anne McGuire: Most people are able to make use of the mainstream employment placing services provided by Jobcentre Plus to find a job. However, for those who need more specialist help, such as someone with a speech impediment, Jobcentre Plus provides a range of tailored disability measures via our highly trained disability employment advisers.

Helen Jones: I am grateful to my hon. Friend for that answer, but what would she say to a 17-year-old constituent of mine with a severe stammer who could be helped by a SpeechEasy device to get into employment—it would help him make telephone calls, attend interviews and so on—and yet has received just one piece of advice: that he should go on jobseeker's allowance and then people will look at helping him? He is a bright young man who is eager to work, and a small investment now would repay the taxpayer many times over in the future. Can we not look at providing more help for people such as him who want to contribute to society?

Anne McGuire: I recognise the picture that my hon. Friend has painted. Through Jobcentre Plus and our disability employment advisers, there are ways in which a young man in such a position can be assisted through the training and interview processes. If they are successful in getting a job there is also, of course, our successful "access to work" programme to address ways of supporting them in employment. I know that my hon. Friend has written to me on the specifics of her constituency case and I will respond on that as soon as possible.

Angela Watkinson: Anyone who has a speech impediment or communication difficulty, whether it results from a physical disability or a psychological problem, should ideally be able to access speech therapy long before they reach the stage when they want to attend a job interview. I would include in that many young people who do not have a speech impediment but who have barely intelligible speech. They need to have that made known to them, so that they present themselves well and to best advantage when they go for a job.

Anne McGuire: I understood the comments of my hon. Friend the Member for Warrington, North (Helen Jones), and likewise I understand exactly what the hon. Lady is saying. I hope that she welcomed the recent statement in the pre-Budget report supporting enhanced facilities for speech therapy. We recognise that communication is important in getting through the interview process and getting a job. That is why Jobcentre Plus works with the individual, particularly if they have a speech impediment, to see what is most appropriate to take them through that quite difficult process,

Danny Alexander: Does the Minister think that a young person who has a severe speech impediment would qualify for incapacity benefit under the new assessment announced today, or would she include such a person in being part of the sick-note culture? Would it not be better for all concerned if the Government concentrated on putting their efforts into providing tailored support for such people to get back into work, as proposed in the Freud review, which Ministers have now ditched, rather than on demonising disabled people by using negative stereotypes of the type that we have read about again in the papers today?

Anne McGuire: I regret the sort of angle from which the hon. Gentleman has come at this issue, because when we debated the Welfare Reform Bill in Committee, we were clear that the way in which we would work in future would be to consider and support the individual, and to identify their needs to ensure that they moved into work with the proper support when that was appropriate. Of course, it would be ludicrous for me to say that one person would be able to qualify for the new employment and support allowance whereas someone else would not, because it is very much tailored to individual needs, including training needs, individual aspirations and how those people move into work. For the hon. Gentleman's information, we are implementing the recommendations of the Freud report.

Mark Harper: My question follows the point ably made by the hon. Member for Warrington, North, and is similar. The Minister will know that last week Scope launched its "no voice, no choice" campaign, which specifically examines the need of many disabled people for communication devices, both to have much more fulfilled lives and to get into employment. Is she able to update the House on the steps that she and her colleagues are taking to improve that situation to deal with both the constituency case that has been mentioned and people more widely?

Anne McGuire: Obviously, I have read Scope's report. We have clearly identified communication as an issue for many people, which is why we have support workers for many people who have a visual impairment and why Braille is part of the working environment—that is supported through our access to work programme. For those who have a hearing impairment, we provide British Sign Language signers and we examine different ways in which we can support technology to maintain people in their employment. Of course, I would be delighted to update the hon. Gentleman, in his new capacity as shadow spokesperson on disability, at an appropriate future time.

Child Maintenance and Enforcement Commission

Keith Vaz: When the Child Maintenance and Enforcement Commission will commence its work; and if he will make a statement.

Peter Hain: Subject to parliamentary approval, the Child Maintenance and Enforcement Commission will become operational in 2008. I have appointed Janet Paraskeva as its chair designate. She brings considerable skills and experience to the role and she will provide outstanding leadership.

Keith Vaz: I thank the Secretary of State for that answer. What would he say to my constituent, Martin Smith, who has been in correspondence with the Child Support Agency for the past four years? He has stated that he was the father of a child, and he then submitted his DNA report, which the CSA has lost. The CSA has been taking money out of his account every week, and he now risks losing his job. Will the Secretary of State assure the House that the transitional arrangements that he brings into force will ensure that such cases will be dealt with swiftly before the new organisation takes over?

Peter Hain: I would certainly like to examine the case of the constituent mentioned by my right hon. Friend, because his account makes it sound disturbing. There is no doubt that from its original inception in the early 1990s, the CSA has been a real problem in dealing with the problems that it was set up to resolve. It has improved its performance recently, but we are replacing it with the new commission precisely to start on an entirely new footing and to ensure that we provide child support in the way that it ought to have been provided all along.

Julie Kirkbride: The Secretary of State has just rightly said that since its inception the Child Support Agency has encountered many difficulties. I am sure that he will be aware, as are many hon. Members, that one of the principal difficulties has occurred when the absent parent—the parent without care—has been self-employed, and it has therefore been impossible to reach or place enforcement orders on their earnings. Can he tell the House whether the new agency will have any other, better methods of dealing with that intractable problem than has been the case in the past?

Peter Hain: We will provide powers for direct collection from bank accounts, because the hon. Lady is right that there is a problem with self-employed people. We will also encourage mediation, especially for those on benefit. At present, they have to enter into a statutory relationship, via the CSA. If the issue could be voluntarily agreed, it could remove that obstacle to a proper relationship between the parents and support for the resident parent. The self-employed issue remains one that we need to resolve.

Anne Begg: Will the new CMEC take a different approach to shared care, in which children spend 50 per cent. of their time with each parent, especially when both parents are working and have an income? Under the CSA, one parent always has to be identified as the parent with care.

Peter Hain: Yes, I do think that CMEC will provide a more satisfactory outcome in such instances, to which my hon. Friend is right to draw attention. For a start, it will provide scope for greater voluntary arrangements and mediation, as well as an ability to offset in cases like the ones that she mentioned.

Patrick Cormack: I am sure that we all have numerous cases of the insensitivity and inefficiency of the CSA that we could lay before the Secretary of State. What procedure will the Secretary of State adopt to monitor the work of the new body, so that we do not have a disaster followed by a fiasco?

Peter Hain: I am confident that we will not have that— [ Interruption. ] Well, I remember the early days of the CSA, as a Back-Bench Labour Member, after it was set up by the previous Government, and it was an absolute disaster. Performance has improved, but the hon. Gentleman is right to demand of me that it improves further. It will be monitored, and I hope that the Work and Pensions Committee will also keep a beady eye focused on it. We want the new arrangement to ensure that the support gets to the child, so that the non-resident parent—usually the father—fulfils his responsibility, but it should be done in a fair way, which is often perceived not to be the case.

Child Support

David Kidney: What preparations he has made for the proposed changes to the system of child support.

James Plaskitt: The first concrete steps in implementing the reforms have already been taken. For example, in the pre-Budget report, we announced the increases to the child maintenance disregard to £20 a week by the end of next year, and to £40 a week from April 2010. That change alone will lift 50,000 children out of poverty.

David Kidney: I am grateful to my hon. Friend for that answer. When we move to the new system, there will undoubtedly be a mass of cases under the first two systems in which there are still unpaid arrears. Will he consider whether mediation might have a part to play in resolving long-standing disputes about how much should be paid each week or month, and if alternative dispute resolution proves successful in that regard, will he consider a role for it in the new system?

James Plaskitt: We are taking an important step in the direction that my hon. Friend seeks, in that CMEC will come with an information and support service which will, for the first time, give advice and support to separating couples about how they should proceed and what arrangements they might make on a voluntary basis for securing the future flow of maintenance. He will also know that since January 2006 the family mediation helpline has been in existence, and I expect that the new advice and support service will be able to signpost the mediation service and refer people to it.

Anne McIntosh: Although I realise that the CSA has a difficult task, what does the Minister propose to do about calculations of the income of absent fathers that take so long that by the time the arrears are due the father gets a shock and is unable to pay them all in one go? That is a real problem, as I am sure other hon. Members have heard; those people are faced by payments that they cannot meet.

James Plaskitt: Of course, improving performance as the hon. Lady describes is not just a case of waiting for the new commission to come into existence; it is important to improve performance now, for exactly the reasons she indicates. That is why we are making additional investment through the operational improvement plan, and the secret of that is to speed up the processing of cases, so that whereas back in March 2005, before the plan was under way, only 30 per cent. of cases were processed within 12 weeks, the number is now 74 per cent. The significant investment we are already making in the existing agency is already improving performance and that will carry forward under the new arrangements.

Pensioner Poverty

Shailesh Vara: What his most recent estimate is of the proportion of pensioners living in poverty.

Mike O'Brien: Since 1997 pensioner poverty has been reduced by a third to 17 per cent. Through targeted support, such as pension credit and £11 billion of extra funding, we have lifted more than 1 million pensioners out of relative poverty.

Shailesh Vara: I am grateful to the Minister for those comments.
	According to the Prudential, rising food prices affect pensioners more than any other age group. Does the Minister share my concern that as food prices are increasing at their fastest rate in 14 years, that is having a negative impact on pensioner poverty?

Mike O'Brien: What we have ensured is that we continue to deal with the issues surrounding pensioner poverty, which is why we introduced pension credit. We have sought to lift the poorest pensioners out of poverty, and they are the people who would be most affected by increases, say, in food prices. At the same time, we have sought to provide a solid foundation of support for pensioners who are beyond pension credit levels. Those are issues, which is why the Government continue to upgrade the level of pension credit.

Terry Rooney: My hon. and learned Friend will be aware that fuel prices are an issue for many pensioners, but is he aware of the British Gas scheme for a social tariff for those on lower incomes? One of the problems of expanding the scheme is access to data, so will he undertake to have conversations with British Gas about data sharing and how it might be taken forward?

Mike O'Brien: I think the straight answer to my hon. Friend is yes.

Nigel Waterson: But can the Minister confirm that 2 million pensioners are living in poverty and that the very poorest pensioners are seeing their real incomes fall by 4 per cent. a year—costing on average more than £250? Will he join me and my hon. Friend the Member for Epsom and Ewell (Chris Grayling) tomorrow night at the vigil outside Downing street to be held by some of the 125,000 pension victims? If he comes to talk to them, will he explain why he is still refusing them the help that they need?

Mike O'Brien: First of all, in terms of numbers we estimate that 1.1 million to 1.7 million pensioners do not take up pension credit. I think before the hon. Gentleman makes comments such as those he has just made, he should recall that when the Conservatives were in office they left 2.7 million pensioners living in poverty, many living on as little as £69 a week; many women were restricted from building up state pension entitlement in their own right and carers were similarly mistreated. In talking about the financial assistance scheme—the help for the 125,000 pensioners concerned because of the breakdown of their pension scheme—the Tories should be a little careful; they cannot afford to claim that they looked after pensions during their term. They created the circumstances in which many of those schemes got into trouble. In 1986, pension fund surpluses were capped by the then Chancellor. They allowed pension holidays—

Mr. Speaker: Order. David Winnick.

David Winnick: Should not the Government be warmly congratulated on the measures taken in the past 10 years, which the previous Administration refused to take and from which many of my constituents and others, especially poorer pensioners, have benefited? When the Government are acting in the right direction, as they do on most occasions, no one is a greater admirer than I.

Mike O'Brien: As always, I am grateful to my hon. Friend for his support. This Government are tackling the problems of pensioner poverty left to us by the previous Government.

Foreign Workers

Peter Bone: What estimate he has made of the change in the proportion of foreign workers in the UK labour force since 1997.

David Amess: What estimate he has made of the change in the proportion of foreign workers in the UK labour force since 1997.

Peter Hain: According to the latest estimates available, about 7 to 8 per cent. of those in employment are foreign nationals; in 1997, the figure was 3 to 4 per cent. The employment rate of both UK and foreign nationals has increased since 1997, from 73.2 per cent. in 1997 to 74.8 per cent. in 2007 for UK nationals, and from 60.6 per cent. to 67.6 per cent. for foreign nationals in the same period.

Peter Bone: I am grateful to the Secretary of State for such a comprehensive answer. When the Prime Minister said,
	"British jobs for British workers",
	he knew that that policy was illegal under European Union law. Given the facts that the Secretary of State has just stated, would the Prime Minister have been straight with the British people had he said, "British jobs for European workers"?

Peter Hain: The Prime Minister set out very clearly his objective, my objective and the Government's objective of getting British benefit claimants to become British workers by getting into British jobs. That is our strategy; it is perfectly in line with EU law, and it marks a strong contrast with the record of the Conservative Government, under whom the benefits mountain mushroomed. We have now taken 1 million people off benefits, and many more people are coming into jobs every week as a result of our Government's employment programmes.

David Amess: Following on from the question put by my hon. Friend the Member for Wellingborough (Mr. Bone), is the Secretary of State telling the House that he agrees with the Prime Minister's statement that there should be British jobs for British people, when most hon. Members believe that such a slogan is one that we would find the British National party using, and is neither enforceable nor legal?

Peter Hain: I have just explained to the House, and I remind the hon. Gentleman of what I said. Does he not support the Government in getting people off benefit and into work—getting British people off benefits and into British jobs? Of course he should support us. That is our objective and that is what the Prime Minister was talking about. The vehicle for doing that is the signing up of more than 200 local employment partnerships, with employers joining them, to get people directly off incapacity benefit and into work, and to get older people and lone parents into work. Our aim is precisely to achieve genuine full employment—an objective whose achievement was completely impossible under the Tory Government, but is now in sight as a result of our policies.

David Taylor: Sections of the British economy, not least the national health service, the caring professions, the construction industry and food processing, have benefited enormously from the efforts of foreign-born workers, but if we are to continue to benefit, the general public must have greater confidence in the figures that the Government produce. Does my right hon. Friend agree that there is a risk that "official Government statistics" will become a term of abuse and dispute?

Peter Hain: If my hon. Friend is saying that the statistics produced for Ministers and used publicly in good faith should be the best possible estimates, I completely agree with him. That is why, at the earliest opportunity, when the Minister for Employment and Welfare Reform, my hon. Friend the Member for Don Valley (Caroline Flint), and I discovered that we had been wrongly advised about those estimates, we immediately corrected them to the House. In addition, at my first opportunity I phoned the shadow Secretary of State to tell him, so that he could go out and attack the Government's record in the media. He had plenty of warning.

Gwyneth Dunwoody: There are two ways of dealing with the problem of immigration. One is to welcome the economically active and very intelligent workers whom we have taken into my constituency, largely from Poland. The other is deliberately to foment trouble by attacking such workers in the local paper and having pictures taken outside Polish shops, as though they were not only a wave of invaders who are damaging the economy, but totally unacceptable. Will my right hon. Friend condemn those who, for narrow political purposes, seek to foment trouble between a stable section of society and one that will benefit from the incomers?

Peter Hain: I could not have put it better myself; my hon. Friend is absolutely right. The truth is that foreign nationals have made a significant contribution to Britain's economy over the years, including as regards our recent record of growth and rises in wealth. They have made a positive contribution in her constituency and, I am sure, every other constituency in the country.

Nicholas Winterton: The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) was absolutely right in what she said, and many of us realise the problems that she faces in her constituency, but are not the Government aware that unless foreign workers are regulated and restricted in coming to this country, it is likely that a lot of them coming here will depress the wages of the lower-income groups in this country? That is surely a disadvantage and, in times of rising unemployment—maybe we will get that—there could be a problem; social tension might be created. Is it not responsible to take a really sensible line on the number of immigrant workers who come to this country?

Peter Hain: I am very much in favour of sensible lines. In respect of the problem, the hon. Gentleman is right to say that there is a danger that foreign nationals could depress wage levels. That is why the minimum wage that we brought in must be enforced rigorously throughout the economy. In some cases, that is not happening, and foreign nationals themselves are being exploited, so we are bringing in tougher measures to ensure that it does happen—and to enforce employment rights, which are not always enforced. I hope that he will join me in insisting that the legal rights for which we have legislated as a Government, including the minimum wage, are properly respected, in Macclesfield and elsewhere.

James Clappison: The Secretary of State was right in his statistic when he told the House that the proportion of non-UK workers in the work force has almost doubled since 1997. He could have added that the proportion of UK workers has fallen in the same period. Furthermore, is he aware that since 1995, the number of British jobs occupied by British workers has decreased? At the same time, there has been a continued increase in the number of non-UK nationals in employment, including both EU nationals, to whom the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) referred, and non-EU nationals. The Government continue to issue an ever-increasing number of work permits, at a time when there is an influx of nationals from the A8 states. Is it not time for proper co-ordination between Departments on the issuing of work permits, rather than country-cramming and idle boasts about British jobs for British workers?

Peter Hain: If the hon. Gentleman supported the policy of identity cards, it might be easier to resolve the question that he has put. Let us look at the facts. The facts are that we have seen a million more British nationals in jobs under our Government. Unemployment and the claimant count rate are at an historically low level. There are 660,000 job vacancies in the British economy today and every day. Also—this is crucial to a sensible analysis of the debate—the number of working-age British people has fallen significantly, because it is an ageing society. Therefore, one might also ask the question: what if those foreign nationals, including those from Europe, had not been here to fill the jobs in the gap that an ageing population left behind? That is why we want to get more people off benefits and into work, and why the Prime Minister's policy of getting British benefit claimants into British jobs, so that they become British workers, is the right policy.

Financial Exclusion

John Robertson: What steps his Department is taking to encourage third sector organisations to help tackle financial exclusion.

James Plaskitt: The £42 million growth fund is investing in more than 120 credit unions in all areas of the country, including Glasgow. In addition, the "Now let's talk money" campaign is raising awareness of the need for financial inclusion. As a result, more than 2,000 intermediary organisations are helping people to take advantage of free face-to-face advice and affordable credit.

John Robertson: Credit unions and the Citizens Advice money-lending advice centre face the threat of cuts in their funding. Is it not time that we took stock of that and made sure that people receive the services that they so richly deserve and need, instead of cutting money for people who need it most?

James Plaskitt: I agree with my hon. Friend's comments. As he knows, three schemes in Glasgow are already directly benefiting from the additional investment from the growth fund. The "Now let's talk money campaign" is rolling out across the entire United Kingdom. Local organisations in Glasgow are benefiting from that help, and in turn they can do more in the local community to assist people who need help managing their finances or who need debt advice.

Philip Hollobone: Due to the complexity of the benefit system and the fact that many Departments are simply not doing their jobs properly, organisations such as Kettering welfare rights advisory service are doing sterling work to make sure that people are not financially excluded. In the past financial year, Kettering welfare rights advisory service secured more than £3 million for people who would otherwise not have qualified for it, including £1.3 million in attendance allowance, more than £1 million in disability living allowance and £173,000 in pension credits. If Departments were doing their jobs properly, organisations such as Kettering welfare rights advisory service would not have to do that good work.

James Plaskitt: All constituencies contain welfare rights organisations that provide the assistance to our constituents to which the hon. Gentleman has referred. Those organisations do a fantastic job, and I am happy to congratulate the organisation in Kettering that he has mentioned on its work. It is important that we continue to make progress on the simplification and reform of the benefits system, which is why we are putting additional investment, through the means to which I have already referred, into a variety of local organisations, which exist in the hon. Gentleman's area as well as in others, that work on financial inclusion in communities by giving individuals welfare advice as well as debt advice.

Child Support Agency

Jessica Morden: If he will make a statement on progress of the Child Support Agency's operational improvement plan.

James Plaskitt: The agency is halfway through its three-year operational improvement plan and is showing significant improvements in client services. For example, uncleared applications have more than halved, and more than half of all new applications are now routinely cleared in less than six weeks. As a result of those recent improvements, additional maintenance worth more than £130 million is now flowing to an extra 130,000 children.

Jessica Morden: The emphasis on collecting historic debt is warmly welcomed by many of my constituents who have long-standing CSA cases. Will the Minister outline what progress is being made under the improvement plan and state how long it will take to recoup outstanding arrears?

James Plaskitt: The debts within the organisation built up from day one of its operation, and they have accumulated over no fewer than 14 years. Within the operational improvement plan, we aim to collect £200 million of arrears by March 2009. Halfway through the plan, the latest figures show that we have collected £148 million of additional arrears. We have also given staff in the agency new powers to collect those arrears by, for example, using credit card collections over the phone. That has only recently come into effect, and it is proving to be very effective and has already raised an additional £12 million of arrears.

Maria Miller: I know how hard CSA staff are working to try to improve the service that they offer to people such as my constituents in Basingstoke. Does the Minister share my concern that the operational improvement plan is falling somewhat short when it comes to more complex cases handled through the Bolton office? What reassurance can he give my constituents in Basingstoke, who are still experiencing waits of up to six months before they hear anything about how their case will be handled through Bolton? Why is it—

Mr. Speaker: Order. That is enough for the Minister.

James Plaskitt: Thank you, Mr. Speaker. Complex and clerically handled cases were transferred to Bolton; as we have said before, there were difficulties with that. That situation is now improving. The fact that we transferred some of the more complex clerical cases to Bolton released a significant number of staff at the agency to pursue other objectives.
	I do not agree that the operational improvement plan is falling short of its goals. For example, the number of uncleared cases, which stood at 226,000 in March 2005, is now down to 128,000—that is a 43 per cent. drop. Some 130,000 more children are benefiting and £130 million more is being collected. Furthermore, the number of cases in receipt of maintenance is up by 29 per cent. Just halfway through its phase, the operational improvement plan is delivering the improvements that we expected of it.

Rob Marris: What steps is the CSA taking to clean up its act on the length of time that its staff—who are probably very overworked—take to reply to letters from MPs about CSA cases? In my recent experience, the service to MPs, who act on behalf of constituents who are often in considerable financial difficulties, has worsened.

James Plaskitt: I am disappointed to hear that, because I have visited the CSA section that handles MPs' correspondence—it has received from us additional staffing support and additional investment—and my understanding was that the processing times for MPs' correspondence had improved. If my hon. Friend gives me the details of the particular case on which he is trying to make progress, I shall be happy to pursue it for him.

Credit Unions

Nia Griffith: What recent steps his Department has taken to support the work of credit unions; and what plans he has for further assistance.

James Plaskitt: Further to the answer that I gave to my hon. Friend the Member for North Ayrshire and Arran (Ms Clark), we are awaiting the outcome of deliberations on how the £130 million financial inclusion fund, announced in the recent Budget, will be utilised. Given appropriate funding, our intention is to support growth in the third financial sector, to encourage high-performing credit unions to extend their reach, to offer banking services, to promote safe saving and to offer basic insurance products.

Nia Griffith: Will the Minister have urgent talks with Treasury colleagues about why they have been encouraging credit unions to offer easy credit rather than follow the well-tried policy of insisting that customers prove their ability to save? My local credit union in Llanelli, which provides an excellent service, is concerned that easy credit could lead to unserviceable debts and put the security of the credit union itself at risk.

James Plaskitt: Under the rules that apply to investments in respect of the growth fund, it is clear that credit unions should do a full assessment of individuals applying for credit. It is certainly not the case that credit should be extended to individuals who cannot meet the repayments. The important advantage that the growth fund investment gives is that its loans are running rates that are probably at least half those for loans secured from doorstep lenders and vastly less than rates secured from loan sharks. Provided that credit unions carry out the necessary checks on individual applicants, the loans should be affordable.

Disability Living Allowance

Laurence Robertson: What estimate he has made of the average time taken for a medical re-examination in connection with a disability living allowance application to be carried out in the most recent period for which figures are available.

Caroline Flint: Following receipt of a request to examine a disability living allowance customer, ATOS Healthcare took an average of 11.4 days to complete any medical examination process in the three months to September 2007. There is no distinction between initial examinations and re-examinations.

Laurence Robertson: I am sure that the Minister will appreciate that in some cases the process takes quite a bit longer. A constituent of mine, who struggles to walk, cannot lift heavy things and cannot even raise her arms above her chest, was receiving the disability living allowance; on further examination, however, it was removed. Four weeks ago, she reapplied for a medical assessment, but she does not even have a date for it yet. If I supply the Minister with the details, perhaps she will kindly look into the matter. In general, is the picture not rather a poor one?

Caroline Flint: The target is an average of 12 days, so, on average, the company is within target. I accept, however, that when there are averages some people fall outside them. If the hon. Gentleman writes to me, I would be happy to follow up the details of his constituent's case.

Maternity Leave

Roberta Blackman-Woods: What plans he has to extend support for people on maternity leave to students and those paid a stipend or grant rather than a wage.

Anne McGuire: The Government view individuals studying full-time in further or higher education as students and, therefore, the responsibility of the education system. However, support may be available for some students through income support and tax credits, depending on their individual family circumstances.

Roberta Blackman-Woods: I thank my hon. Friend for that response. She may be aware of the situation of Beth Porteous, one of my constituents, who is a postgraduate student at Durham university and is expecting a baby. She gets paid quarterly by the university for research work that she undertakes, but she has been told that she does not qualify for statutory maternity pay or maternity allowance and that she must take unpaid leave and return to work eight weeks after the baby is born. I should be grateful if my hon. Friend would undertake to look at cases such as Beth's to see what additional support can be given to women who find themselves in that unfortunate situation.

Anne McGuire: I thank my hon. Friend for that question on behalf of her constituent. I think that the complication in this particular case is that her constituent is designated as being on a research grant as opposed to receiving a wage from the university. However, I will of course give her a commitment to look into the precise situation and come back to her with a written response.

TOPICAL QUESTIONS

Jeremy Corbyn: If he will make a statement on his departmental responsibilities.

Peter Hain: One of the key responsibilities of my Department is to ensure that all those who have a health condition or a disability but who could work are given the right type of help and support to enable them to find and keep a job. Many of the 2.64 million people of working age are currently on incapacity benefit because the personal capability assessment has focused more on people's incapability than their capability for work. In October 2008, I am therefore introducing a new medical test—the work capability assessment—that will assess people's physical and mental ability and what they can do rather than what they cannot do. I placed a report evaluating the new test in the Library this morning.

Jeremy Corbyn: May I invite the Secretary of State to indulge in a bit of interdepartmental thinking and action to overcome a problem that is becoming very apparent in inner-city areas such as mine? Single parents have great difficulty in accessing council or housing association properties because of the shortages and are therefore placed in private accommodation by the local authority, often on a very high rent—sometimes as much as £300 or £400 a week. That rent is then paid for by housing benefit. I have no problem with people getting housing benefit; this is not an attack on housing benefit, but the problem that then emerges is that, if and when they are offered a job or encouraged into a job by the agency, they have to reject it because they need to get one that pays more than £15,000 to start with just to pay the rent. That means that they are in danger of losing benefits and we are in danger of losing somebody who wants to work and contribute to society. This is a twin problem of benefits and housing. I realise that it is not entirely the Secretary of State's responsibility, but does he recognise that it is a serious issue, and is he prepared to do something about it?

Peter Hain: I recognise that this is a real problem, especially in London, with high housing costs as well as, in the case of lone parents, high child care costs. That is why the Prime Minister recently announced that for London there will be an in-work credit of £60 a week for an individual coming off income support, in the case of a lone parent, to enable them to take a job and to deal with precisely the problem that my hon. Friend describes. We will continue to look into the problems of housing costs and how we can resolve them, because we do not want them to be an impediment to work in the way that he describes.

Chris Grayling: This morning, the Secretary of State provided the media with a briefing about his new announcement on incapacity benefit assessments. According to the BBC website, he said that he would tackle sick-note Britain and that the new system will place greater emphasis on what the sick and disabled can do rather than on what they cannot do. Funnily enough, two weeks ago, on 5 November, he made exactly the same announcement to the media, saying that he had plans to "rip up sicknote Britain" and that there would be "an assessment" that would look at
	"what people can do rather than what they can't."
	Why did he make the same announcement twice in a fortnight, and why does he keep briefing the media first and MPs second?

Peter Hain: I placed a copy of the report that makes an analysis of the new medical assessment in the Library this morning. The House was the first to see it, as far as I know. We sought to draw attention to a radical change from what has gone on in the past, in the 1980s and 1990s, when people were smuggled off the unemployment statistics on to incapacity benefit. The numbers tripled, which led to the benefit mountain we received as a legacy from the previous Conservative Government. We are reducing it. For the first time in a generation, the figure has come down—by 120,000 during the past few years—having risen year on year as a result of that legacy. The new, stringent, personal capability assessment, of which I have informed the House, will enable us to bring that number down even more.

Chris Grayling: In fact, the first time we heard about that was in a press release from his Department in January 2006.
	Will the Secretary of State confirm that today's announcement involves 20,000 fewer people claiming incapacity benefit? Will he confirm that that represents less than 1 per cent. of the total of 2.6 million currently claiming the benefit? Unless he manages to increase his current rate of progress, he is set to be 25 years late in hitting his target of getting 1 million people off incapacity benefit.

Peter Hain: On the contrary, compared with the record of the Tory Government, where incapacity benefit tripled, we have already brought the numbers down by 120,000 and this additional test will enable us to accelerate that process. In addition, the rolling out of pathways to work throughout the country by April next year will bear down even more sharply on those figures. At last we will begin to get rid of the awful legacy bequeathed to us by the previous Tory Government, where people were written off on incapacity benefit, instead of being helped into a job, or being given new opportunities, skills and support to get a job, which enable them to transform their lives as a result.

David Evennett: Would the Minister comment on the study by Aon Consulting, published last week, which says that British pensioners receive a pension equivalent to 17 per cent. of average earnings? That is the lowest level in Europe. Are the Government still committed to restoring the link to earnings by 2012?

Mike O'Brien: The comments in the Aon Consulting review were directed at the basic state pension, and then it worked out that figure. Of course, we know that there is a second state pension—an important part of the UK state pension system—that brings people up to a third of average earnings. In the UK, private pensions are more important, and 86 per cent. of UK pensioners have income other than state pensions. Private pensions are also eligible for tax relief so, including a private pension, a pensioner on a medium income gets an income of two thirds of average earnings. The Aon report got a headline, and added a lot of heat but little light. We remain committed to our policy of re-establishing the link to earnings.

Anne McIntosh: The Secretary of State just said that he wants to focus on getting those on incapacity benefit into work. We learnt on Friday that the latest figures show that 510,000 people came from the new Commonwealth countries of India, Pakistan, Sri Lanka and elsewhere, presumably looking for work. He must surely accept that there are not that many vacancies available. How will he achieve what he hopes to do when able-bodied people are coming from central and eastern Europe, as well as new Commonwealth countries, and competing with people on incapacity benefit?

Peter Hain: First, we are changing the basis on which people will be entitled to come and work and introducing a points-based system. In respect of the wider situation, there are 660,000 vacancies in Britain today. It is not like the 1980s and 1990s when people were stuck on incapacity benefit and could not get a job because there were no jobs in constituencies such as mine—former mining constituencies in south Wales. Now there are jobs. There are vacancies everywhere, in every constituency in this country, which is why we want people on incapacity benefit, lone parents on income support, older workers and the long-term unemployed to join the jobs programmes we are undertaking with local employers to get them into work, and we can do that.

Gordon Marsden: Scores of grandparents in my constituency, and many thousands throughout the country, do a terrific job of supporting their grandchildren in a parental role. They are not always given support by residence orders from their local authorities. What more can we do to encourage local authorities to provide such allowances, and what more can be done to support grandparents through the tax and benefit system?

James Plaskitt: I appreciate the points that my hon. Friend makes about the important role that grandparents often play in the bringing up of the children, but those are matters for other Departments. However, I shall happily refer what he said to them, and I am sure that they will contact him.

Tom Brake: Last week the Under-Secretary said in a written statement that overpayments of £26 million had been made in relation to duplicate disability living allowance and attendance allowance payments. Will he confirm whether that will mean trying to recover, on average, £6,500 from pensioners up to the age of 76? Will he also say what percentage of the 4,000 pensioners affected he would expect to write off those overpayments for?

James Plaskitt: I can clarify the situation for the hon. Gentleman. We shall not be recovering the overpayments from anybody who was overpaid in those circumstances, as was set out clearly in the written statement. In case he has not understood the point, let me clarify it for him: there will be no recovery of the overpayments. Indeed, in some instances we shall continue with the current payments—to those who are terminally ill, for example—while ex gratia payments will be made to those disadvantaged by the error.

Nicholas Winterton: May we return to the matter of pensions? I am increasingly concerned that those with occupational pensions who have lost heavily—there are many cases in my constituency—are currently experiencing dire financial hardship. Are the Government in a position to indicate when some action will be taken to assist the 125,000 people who have lost out so much?

Mike O'Brien: I share the hon. Gentleman's concern for the 125,000 people whose pension schemes have failed. We are awaiting the outcome of the review by the Government Actuary, Andrew Young, which is due in the next few weeks. We have indicated that we are looking to maximise the returns from the amounts that remain in those failed pension schemes. We shall then see whether we can match that, to move towards 90 per cent. of the core pension.

Laurence Robertson: Is the Minister aware that benefit claims for Gloucestershire are now dealt with in St. Austell and that claims in Cornwall are dealt with in Gloucester? Is that not rather an odd situation and are there any proposals in the document published this morning to correct it? Since jobcentres were instructed not to give advice or to deal with claims, the whole process has become inefficient.

Caroline Flint: I do not agree that the process has become less efficient. The fact that benefits and employment advice are now dealt with in one place has been welcome. The transformation of our jobcentres from places where furniture was chained to the floor and people looked over large counters to the rather more friendly and welcoming environments that we have today is a plus. Again, however, we constantly seek to improve the delivery of our benefits and to keep on target for waiting times, to ensure that those who are entitled to benefits receive them and that those who are not do not, but get into work.

David Kidney: The staff in Stafford jobcentre do fantastic work in helping people get back into work. I am particularly impressed with their dedication and hard work, and with the way the personal advisers give personal support to new deal clients. As the programme expands, I am sure that staff will be delighted to help get other British benefit claimants into British jobs, but they will also want to know whether they will be supported with the appropriate number of workers to do the work in their office. Against the background of a falling work force in the Department, will local jobcentre offices be given the kind of support that will be needed under the new scheme?

Caroline Flint: It is very much our intention to have the staff to do the jobs that we want them to do. However, the issue is not just about numbers of staff, but about how they work. We have a number of different advisers for different types of programmes, and a certain amount of rationalisation would help in that regard. The issue is also about how our Jobcentre Plus staff work with other organisations, such as the housing benefit office, and with the voluntary sector and, importantly, about the changes that we are going to make to the contracting of provider services, to ensure that we get better outcomes for the taxpayer's investment, rather than just paying for processes. That is the direction for the future, with jobcentre staff, others in partnership and contract providers playing an even more effective role.

Henry Bellingham: Question No. 10, Mr. Speaker.

Mr. Speaker: Perhaps the hon. Gentleman would like to stand and give us his question, then we can get on with it. This is a topical question; he asks the question and he gets a response.

Henry Bellingham: Thank you, Mr. Speaker. I would be grateful if the Secretary of State could tell the House how many people are not in work, education or training, and what the Government are doing about that?

Peter Hain: I congratulate the hon. Gentleman on his belated question; it was a very good one. We are taking action to ensure that we reduce those numbers, including by extending the age until which people will need to remain either in training, in an apprenticeship or in full-time education at school. That policy will help us to bear down on the number of 16 and 17-year-olds who are not in education or training.

Northern Rock

Alistair Darling: With your permission, Mr. Speaker, I should like to make a statement to update the House on the current position with regard to Northern Rock. The House will recall that last week I said during the Queen's Speech debate that I would keep the House informed of developments. I also said that I expected to publish a statement of principles underpinning the Government's approach to proposals received by Northern Rock with regard to its future. I published that statement this morning, prior to the markets opening, in the usual way. Copies are available in the Vote Office and the Library of the House.
	It is important to be clear about the respective responsibilities of the Northern Rock board and the Government. The board is legally responsible to its shareholders for the future of the company. However, the Government have a wider public interest in maintaining financial stability, which is why we agreed to lender-of-last-resort support in September and subsequent lending by the Bank of England. The Government also have an interest in protecting the interest of the taxpayer. Because of this, the Government have, as a major creditor, a direct interest in the future of Northern Rock. The Government therefore have to agree to any proposals for the future of Northern Rock.
	Before turning to our approach, let me deal first with the position on the guarantee arrangements to Northern Rock depositors provided by the Government and, secondly, with the loan facilities provided by the Bank of England to support Northern Rock and to maintain financial stability in general. First, we have made it clear that the guarantee arrangements already announced for depositors in order to safeguard their position will remain in place during the current instability in the financial markets. These guarantee arrangements were absolutely necessary. They have not had any cost to the taxpayer because these deposits covered by the guarantee arrangements remain in the bank. As I have said before, savers are free to take their money out if that is what they want to do, but they have no need to do so. The guarantee arrangements ensure that savers' deposits are safe. The guarantee will not be removed without proper notice being given to depositors.
	Looking ahead, I have made it clear that the Government will legislate for a new regime for protecting bank depositors. As the House knows, we have published a discussion paper on this legislation, and I very much welcome the offer of cross-party support for it. But it is important that we get it right. There are many examples, both here and in other countries, of legislation having been rushed through only to be regretted later. The current consultation finishes on 5 December. I will bring forward proposals in the new year when I have also had time to consider the outcome of the Treasury Committee's work, as it has requested.
	The second element of support is the Bank of England loan facilities. It is important to remind ourselves of why this support was provided in the first place. Northern Rock got into difficulties because it was almost totally reliant on getting very substantial sums from the securitisation and money markets on a continuous basis to do its business. When that lending became ever more difficult, it had no option other than to go to the Bank of England. Because of the possible impact on the stability of the wider financial system, it was right that I authorised the Bank of England to intervene. That, too, had cross-party support.
	While international financial markets have shown signs of improvement since the sharp credit squeeze in August and September, following the problems that arose in the American housing market in the summer, there clearly remains continued uncertainty in the markets. The rates at which banks are willing to lend to each other also remain high in all the major currencies. It is therefore vital that we do everything we can to maintain stability internationally, as well as here at home. As the House knows, we are taking steps at an international and domestic level to improve the regulatory regime and to provide greater transparency. That was the subject of the discussions of G20 Finance Ministers that I attended in Cape Town over the weekend.
	The continuing support of the Bank of England has also given Northern Rock an opportunity to consider its strategic options. I am very clear that this is also the right thing to do and, indeed, when I announced this, it enjoyed support from both sides of the House. I know that there has been interest in how much support the Bank of England is giving. The Bank publishes its balance sheet every week. However, in common with other central banks, it does not provide details of any operations because it believes that doing so would undermine its ability to provide such support. I understand the frustrations that that can sometimes cause, but to provide what would, in effect, be a running commentary on any operations would be likely to have adverse affects that none of us would want.
	Having said that, I can tell the House that Bank of England lending is secured against assets held by Northern Rock, which include high-quality mortgages with a significant protection margin built in and high-quality securities with the highest quality of credit rating. The Bank is the senior secured creditor. The Financial Services Authority has said before, and continues to say, that Northern Rock's main asset base—its mortgage book—is strong and sound.
	As with any lender on this scale, we have ensured that the Bank's lending is subject to significant conditions and controls to ensure that our interests are protected, and, in return for that facility, Northern Rock has agreed a number of controls, including not declaring, making or paying any dividend without the prior written consent of the Bank of England, and not making any substantial change to the nature of its business.
	I now turn to the next stage. It is in the interests of everyone that the situation with regard to Northern Rock is resolved as soon as possible. That was why Northern Rock asked for expressions of interest in purchasing the business. As the company announced earlier today, as part of its review of its strategic options, it has received indicative expressions of interest, covering a range of options for the business. It currently expects to receive further expressions of interest in the next few days.
	It is essential that the public interest is protected. That is why I have published today the principles that will underpin the Government's approach, when assessing proposals from Northern Rock regarding its future. As I have already said, the Government have to agree to any such proposals. The principles make it clear that the Government have a clear duty to protect the public interest, and we will do so. However, I think that the whole House, and particularly Members representing the north-east, will want us to do everything we can within the constraints on us to resolve a very difficult position for Northern Rock.
	Let me therefore set out our approach. First, we must protect the interests of the taxpayer. Substantial sums have been lent, and that money has to be repaid at an appropriate time and rate. The Government will consider proposals with a view to reaching the best outcome for the public purse. Secondly, we want to protect depositors. It is essential to do everything we can both to safeguard their interests and to maintain the service provided to them. Thirdly, we will maintain wider financial stability.
	As I have made clear all along, the Government will now assess proposals from the company consistent with the approach that I have set out, and we remain closely engaged with the company as the best outcome for its future is assessed. As the company has acknowledged today, any proposals would have to be approved by the Government and, importantly, any proposal can be vetoed by the Government. In that way, the Government can ensure that the public interest is safeguarded. As I have told the House on previous occasions, any outcome must meet EU state aid rules.
	It would be quite wrong to dismiss any option now without proper consideration, as some have suggested we do. I continue to believe that it is right to use this time to explore the best outcome for the company and the public interest. I agreed to Bank of England support because I believed it was right to do so. I agreed to continue support to allow Northern Rock the time it needs to consider its strategic options because it was right to do so.
	I have set out today the approach that the Government will take as they assess proposals from the company to ensure that we will approve a solution only if it safeguards both the public interest and the specific interests of the taxpayer. That work is being done now and will be concluded as quickly as possible. I will, of course, continue to keep the House informed in the coming weeks. I commend this statement to the House.

George Osborne: The fallout from the first bank run in 140 years gets worse each week, and today has been another day of weakness and confusion from the Chancellor of the Exchequer. Of course, we all hope that a buyer can be found who will save the jobs at Northern Rock and repay the taxpayer. [Hon. Members: "No you don't."] I am sorry that Labour Members are not interested in jobs in the north-east or in the future of Northern Rock. Perhaps they will pay attention, because we are conscious of the impact of this in the north— [ Interruption. ]

Mr. Speaker: Order. Let the hon. Gentleman ask his questions.

George Osborne: The question we now ask of the Chancellor is simple: has he been honest with taxpayers about the risks that they face, and has he told the whole truth? First, let us look at what he has announced today. He announced that what was supposed to be a short-term emergency facility for Northern Rock may now be extended beyond February and could last for years. Thank you, but we already knew that because it was in a memo from the company's advisers that was leaked last week. Indeed, throughout the crisis we have learned more from media leaks than we have from the Government.
	The Chancellor will not tell us the size of the facility, when he expects it to be repaid or the terms of the repayment, even though much of that information is an open secret in the City. Indeed, the Governor of the Bank of England wants to publish the letter that he sent to the Chancellor to set out those terms. He told the Select Committee that he wanted to do so, but the Chancellor refuses to publish the letter and simply says that it is in the public interest that he should refuse. Clearly, the Governor of the Bank of England disagrees. Will the Chancellor explain in greater detail why he will not publish that letter?
	This is not about the commercial interests that the Prime Minister spoke about last week, but about the public interest and the £900 that has been pledged on behalf of every taxpayer in Britain. The Chancellor talks about the Government's liabilities being secured against £100 billion of Northern Rock assets, but he does not say that many of the assets are already promised to other creditors. Will he confirm that the free assets at Northern Rock could be closer to £40 billion and that total Government liabilities, through both the facility and the deposit guarantee, might now be approaching the total of the available assets, putting the taxpayer further at risk?
	The Treasury also said today:
	"Authorities expect the costs and risks associated with Northern Rock to be borne to the greatest extent possible by the current and future private sector providers of capital."
	So do we, but has the Chancellor given a general guarantee to cover the £13 billion or so lent by medium-term note holders—the large institutions that lent money with their eyes open? Has the Chancellor considered reducing the risk to taxpayers by announcing a cap on the guarantee offered by the Government so that only individual savers are fully protected? Of course, we need to get the depositor protection legislation right, but we now know from the Governor of the Bank of England that he has been pressing the Chancellor to do that for a considerable time.
	The Chancellor has failed to address today the two things that he appears so far to have kept secret from Parliament and from the taxpayer. First, will he tell us whether it is true that the Treasury, as well as the Bank of England, has lent money to Northern Rock? He mentioned only the Bank of England in his statement, but today we are told that the Treasury has also lent so-called subordinated term debt, which does not have to be paid for five years, comes at the back of the queue and is in most danger of default if the bank is wound up. If that is true, taxpayers have been exposed to an extraordinary long-term risk, yet we have been told about that Treasury loan by the BBC's business editor rather than the Chancellor of the Exchequer. If it is true, the Chancellor is surely deliberately withholding information from Parliament and the public. Will he confirm the existence of that Treasury loan?
	The second thing that has become clearer today is that the Chancellor cannot be sure of keeping the promises that he and the Prime Minister made to the taxpayer. He said to the Select Committee that
	"we fully expect to be able to get that money back."
	He said to the public that
	"any money that the Government makes available"
	to Northern Rock
	"we can recover from its assets".
	The Prime Minister said at the Dispatch Box last week that the money from the taxpayer was
	"guaranteed against Northern Rock assets."—[ Official Report, 14 November 2007; Vol. 467, c. 660.]
	Today, the Chancellor merely says that he wants the best outcome for the public purse. Will all the money lent by the taxpayer be repaid with interest—yes or no? Let us hope that the answer is yes and that, in the final reckoning, the taxpayer will not have paid a heavy price for the Government's incompetence. Let us hope that the Chancellor can be honest today about the risks to the taxpayer and about the existence of the secret Treasury loan.
	We are considering a tale of incompetence and weak leadership from a Government who now reel from one disaster to another. We have a Chancellor who appears to have made secret loans from the Treasury, who has made guarantees to the taxpayer that he cannot be sure of honouring and whose weakness contributes to the instability of the financial system. That is why the Chancellor's job is now on the line.

Alistair Darling: I am sorry that the hon. Gentleman was unable to make any constructive proposals. He supported the decision that I made at the start to enable us to provide lender-of-last-resort facilities to the bank. He also supported providing a guarantee, yet he now tries to give the impression that he does not agree with any of those things.
	On the many questions that the hon. Gentleman asked about future proposals, he knows full well that, until we have had a chance to assess the proposals that the various financial institutions have presented and reach a view about what would work, it is impossible for me to state precisely the arrangements that we expect for Northern Rock in future. However, it is right to spend time assessing the proposals that the various institutions have made and then come to a view about what is best to ensure that we secure a future for Northern Rock and protect the wider public interest, especially the taxpayers' money that has been lent to the bank.
	It is hardly a secret that we have made facilities available to Northern Rock—I have informed the House at each and every stage of events, as hon. Members would expect. Furthermore, we were absolutely right to take such actions because the consequences of letting the Northern Rock bank fail, as the hon. Gentleman now appears to suggest that we should have done, would have been immensely damaging to this country's financial institutions.
	The hon. Gentleman asked several questions. First, he asked about the deposits that we are guaranteeing. As I told him, they remain in the bank, so there has been no cost to the taxpayers. The money is there; people can take it out if they wish. However, the guarantee exists, and it is not, therefore, necessary for people to take out the money. There has not been a cost to the taxpayer because the money is in the bank.
	The hon. Gentleman asked about lending to the Northern Rock bank. The lending of last resort and the lending that started in the week beginning 9 October has been by the Bank of England. He asked especially about a story that appeared on the BBC this morning on the element of the loan that represents the penal rate of interest that the Bank of England normally charges. The sum concerned is nothing like the figure about which Mr. Peston speculated on the radio. It is a small amount of money, which will be recovered from Northern Rock. It is due to be recovered by Northern Rock as and when we move to the next stage. There is, therefore, nothing secret about it. It is a perfectly normal lending operation by the Bank of England that is necessary to secure the future of Northern Rock.
	The hon. Gentleman asked about the letter that the Governor of the Bank of England sent. I repeat what I said when he asked that question last week—the Treasury Committee asked the same question. On the evening before the lender-of-last-resort facilities were announced, both the Governor of the Bank of England and the chairman of the FSA wrote letters advising me to authorise such facilities. The letters must be seen together. It is true that the Governor of the Bank of England told the Select Committee that he had no objection to publication. However, the chairman of the FSA most certainly objects to the letters being published. As I said to the Treasury Committee, I do not say that we will never publish them—I believe that, given time, it may be appropriate to do so. However, it would not be in the public interest to publish them now. I have consistently taken that position with the Select Committee and in the House last week and today.
	I believe that what I did in respect of Northern Rock at the start was right. I believe that it is right now to give the bank the space that it needs to consider its strategic options. Anything else, I believe, would be grossly irresponsible, and I am sorry that the hon. Gentleman has chosen to follow that path.

Doug Henderson: May I say to my right hon. Friend that, contrary to the view expressed by the hon. Member for Tatton (Mr. Osborne), his proposals have been rightly welcomed so far in my constituency, where Northern Rock has its head office, and in Newcastle in general? He said that he would outline the principles on which the Government would act in the coming weeks, and I am pleased that the public interest was put at the forefront of those principles. In defining the public interest, is he prepared to look at the question of employment, not only at this time but at the time that any bid might be successful, and for a five-year period afterwards? Will he ask any bidder to itemise its employment plans, both at the time of sale and for a period of five years afterwards?

Alistair Darling: I am grateful for my hon. Friend's support. As he rightly says, there is a great deal of understandable interest in the issue in the north-east, because of the impact on jobs and on the wider economy there. As I have said on previous occasions, I hope that we can do everything possible to allow the Northern Rock to continue to do business. As he knows, many hurdles must be crossed, but we will do everything we can to help. That is why it is so necessary to provide Northern Rock with a breathing space, and it is deeply regrettable that some people, particularly Conservatives, now seem to be suggesting that that is wrong.

Vincent Cable: I do not know whether the Chancellor has been singing in the bath, but he does bear an increasing resemblance to the former Conservative Chancellor, Norman Lamont, who presided over a comparable financial disaster.
	I want to focus on the £24 billion loan—£900 for every taxpayer—which is over and above the £18 billion deposit guarantee, which is less controversial and which we all support. The former Prime Minister, Tony Blair, was widely criticised for advancing £800 million for the millennium dome. In the past few weeks, the Government have provided the equivalent of 30 millennium domes to this bank, without even the prospect of a decent pop concert at the end of it.
	The key question, which I put to the Prime Minister last week, is this: is the lending secured? He said that it was. Will the Chancellor confirm, however, that that is not the case? Of the loan, £13 billion has a first charge security, although at a more relaxed standard than is normal; £11 billion, however, is wholly unsecured. Half the assets of the bank have been packaged up by a company called Granite, which is registered in the Channel Islands and has the first claim on the assets. The remainder is a collection of mortgages, many of which were advanced at the peak of the property market and are now of declining value. I therefore return to the question that I put to the Prime Minister, and that has been partially put to the Chancellor already. Will he stand up and give an absolute guarantee that the loan will be repaid in full, with full interest, within the lifetime of this Parliament?
	Will the Chancellor also comment on the management of the company? Does not Mr. Adam Applegarth, who has just been dismissed, now have a pension pot of £2 million and various bonuses, which are underwritten by the taxpayer? Will the Government explain how they got into a position in which they have entrusted £24 billion to a management team that was discredited, that led the bank into its present crisis, and whose chief executive showed such contempt for his own bank that he sold his own shares to invest in a country estate and a Ferrari for his wife?
	That is not the only conflict of interest. An attempt is being made to sell the bank, led by the company. The company has a clear conflict of interest. It is in the interests of the directors and the management to maximise the taxpayer's contribution. The taxpayer's money is being used to prop up the bank, and to provide a profit opportunity for spivs in the City.
	Let us consider the alternatives. The ideal outcome— [Interruption.]

Mr. Speaker: Order. The hon. Gentleman must be allowed to ask his questions.

Vincent Cable: The ideal outcome would be the sale of the bank, as a going concern, to a private operator who could maintain the employment in the north-east and the brand, and repay the Government in full. It is clear from this morning's bids, however, that that is a fantasy and will not happen, which leaves us with two very unpalatable options.
	The first option is liquidation of the bank—putting it into administration—which I think we all agree would be a disaster. It would devastate the north-east, the shareholders would get nothing, and the Government would lose a great deal of money. Should not the Government therefore consider the other option, which is temporarily assuming full control of the bank? That would eliminate the conflict of interest, it would provide a breathing space enabling— [Interruption.] It would provide a breathing space— [Interruption.]

Mr. Speaker: Order. I must now stop the hon. Gentleman.

Alistair Darling: I note that over the weekend the hon. Gentleman changed his position on Northern Rock several times. On Saturday he was calling for full-scale nationalisation, by yesterday he was calling for reluctant nationalisation; and today it was reluctant nationalisation for a very short period. This afternoon, having denounced the City, he went on to press for a quick sale to the very people whom he had denounced.
	I understand full well that the board and the shareholders have a particular interest with regard to Northern Rock—I made that clear in my statement—but we, the Government, have an interest in protecting not just financial stability but the taxpayer's money that is being lent. The reason that we insist on our interests being upheld is that we would have to agree with any proposal for the future of Northern Rock. If we do not like a proposal, we can say no to it. We can veto it because, through the Bank of England, we are by far the major creditor.
	I believe, however, that simply plumping for one solution today—and presumably, by extension, not bothering even to consider any of the expressions of interest that have been received—would be extremely short-sighted and foolish. Would it not be better to use the time that we have to establish whether those expressions of interest can be translated into a firm proposal that would both help the company and, crucially, protect the public interest? I think that that would be far the better course, and it is the one that I propose to pursue.

Ronnie Campbell: At least 6,000 people work at Northern Rock, many of them in my constituency. I agree with my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) that employment is a big issue among my colleagues and Members of Parliament in the north-east. I join my hon. Friend in asking the Chancellor please to ensure that those jobs are secure. We know that the money is important and paying back the taxpayer is important, but 6,000 jobs are a lot of jobs and we cannot afford to lose them.

Alistair Darling: My hon. Friend is absolutely right. The jobs are very important, which is why I think that the Liberal Democrats' attitude is so short-sighted and wrong. I think that we owe it to people in the north-east, as well as to the general public, to do all that we can to try to reach a point from which this business can be taken forward. It will be difficult—many hurdles will have to be overcome, and a great deal of hard work will be involved—but I think that the Government have a responsibility to ensure that we can manage the process, and that it would be wrong to close the door on any possibility of something in the future.

Peter Lilley: Will the Chancellor spell out in more detail why, despite the unprecedented sums involved, he is unable to be more transparent with the House in regard to the amount, the conditions, the terms and the repayment process? He now says that that is not possible because of the central bank's commercial confidentiality, but we were told earlier that the potential deal being considered by the Treasury and the bank was aborted precisely because it was thought that such details would have to be made public.

Alistair Darling: The right hon. Gentleman raises two points. Let me deal with the second one first, as there has been some comment about a proposal that a major bank made to the Government, the Bank and the FSA at the end of August. There was no firm proposal on the table, but, as the FSA chairman has said, an exploratory inquiry was made as to whether the Bank would be prepared to lend the institution in question about £30 billion at commercial rates. It was explained that there were three problems with that. First, neither the Bank nor the Government normally provides commercial lending in this way to a going concern, which is what that financial institution was. The second problem was that if we were to entertain such an option we would have had to ask other banks whether they would be willing to enter into a similar arrangement, perhaps involving less Government money. As the right hon. Gentleman will recognise, the Government cannot just, in effect, lend £30 billion to a bank without there being some sort of due process to allow others to see whether they could do something more competitively. I would have been open to severe criticism if I had done that. The third problem was that, on any view, this would have been state aid.
	As it happened, having made the preliminary inquiry the institution never pursued the matter. The proposal was made on a Saturday and the institution withdrew its interest in Northern Rock on Monday. Therefore, it was never the case that there was a proposal on the table that was there to be considered and accepted or rejected. There was a preliminary inquiry, and I have explained what the difficulties were. However, as I have also said to the House, and to the Treasury Committee, I have always taken the view that had it been possible for Northern Rock to have been acquired prior to all these difficulties, that would have been the best solution. I must also say to the right hon. Gentleman—I apologise to the House for taking up so much time in dealing with this, but it is important—that we should remember that that approach was made before anybody in the outside world knew there was a problem with Northern Rock. For us to have then started a competition as to which bank might take it over might have drawn attention to the very problems we are concerned about.
	Let me now deal with the other part of the right hon. Gentleman's question. I will be able to tell the House about the terms of repayment once it is clear what course of action is best for Northern Rock and the public interest, as I have set out. It is not possible to do that until we have a proposal that is properly assessed and worked out. On the right hon. Gentleman's point about the general Bank of England question, I explained the position in my statement.

Jim Cousins: The whole House will have noted that the Liberal Democrats have as much regard for the 5,500 employees of Northern Rock in the north-east—and the 6,500 nationally—as they had for the job of their former leader.  [Interruption.] Two or three faces in public, 10 in private—that is the policy of the Liberal Democrats.
	Does my right hon. Friend accept that the policy of nationalisation would lead to a slow lingering death for the jobs of the Northern Rock workers, its assets and Britain's reputation as a major financial services centre, with my right hon. Friend the Chancellor cast in the role of undertaker—and that only by finding a successor business to grow on those jobs, assets and reputations can we offer any real prospect of the taxpayers getting their money back?

Mr. Speaker: Order. I remind Members that they must ask brief supplementary questions.

Alistair Darling: I agree with my hon. Friend. It is regrettable and surprising that the Liberal Democrats never seemed to support our earlier proposals to keep Northern Rock open. It would also, however, be a mistake to shut off all other options and simply go for one at this stage; that does not seem to me to make any sense at all.

Michael Fallon: Is it the Chancellor's position now that there is no agreed schedule of repayments for the £23 billion? Is it not also clear from his statement to the stock exchange that he now envisages state aid continuing well beyond the original February deadline?

Alistair Darling: In relation to that last point, as I said to the Treasury Committee, of which the hon. Gentleman is a member, we wanted to make it clear to the company that we needed to get proposals and we needed to bring that to a head, which is why we said that we would review the matter at the end of February. We have never said that everything would stop at the end of February and could not possibly continue. Surely the best thing to do to secure the best possible repayment of the loan made by the Bank of England is to assess the proposals being worked up and then decide on the appropriate rate and timing of repayment. To box ourselves in now and exclude options without having properly considered them would be the wrong thing to do.

John McFall: I refer the Chancellor to his statement on principles this morning. Paragraphs 2 and 3 talk about protecting taxpayers' interests, promoting financial stability and ensuring that the consumer is safeguarded. For the sake of the Treasury Committee's inquiry, will he tell us in what order he places those objectives? May I remind him about Friday's statement from Northern Rock, which was put out late in the evening and did nothing to bring credibility or focus to this issue. Will he impress upon Bryan Sanderson, its chairman, that there is no case for a payout for its chief executive, Adam Applegarth? Suspicious minds would consider that he is staying on until February so that it is reported in the spring 2009 annual reports, when this will have been swept under the carpet. Credibility is important in negotiations over the next few months. Will the Chancellor ensure that that credibility is injected into this company?

Alistair Darling: I am sure that Bryan Sanderson will have heard what my right hon. Friend has had to say. It is important, especially given the position that Northern Rock is in at the moment, that whatever it does, it must ask itself whether that is the right thing to do. In answer to his question about the three principles that I set out—to protect taxpayers, to promote financial stability and to protect depositors—they are all equally important. For the avoidance of doubt, both inside this House and out, ensuring that we safeguard the taxpayer's interest is very important, but the other principles are important too.

Stewart Hosie: The Chancellor said in a previous answer that the facility would be reviewed at the end of February. Today's Treasury press release was headed:
	"Principles for assessing Northern Rock proposals".
	It states:
	"The principles clearly state that interested parties should not assume at this stage that the current Bank of England loan facilities will be available beyond either any sale or the expiry of the facilities in February."
	Yet in his statement the Chancellor said that it would be wrong to dismiss any option, and the third point of what he called his approach was to maintain wider financial stability. Those comments may seem slightly inconsistent, so to help provide transparency, which he was discussing with the G20 Finance Ministers at the weekend, will he tell us how long he expects to, or would be prepared to, have the guarantee and the facility in place?

Alistair Darling: May I suggest that the hon. Gentleman read the statement on principles that I have published today? It says that bidders should not just assume that the facilities will be available in perpetuity, and then goes on to say that we
	"are willing to discuss any proposals made".
	That is entirely consistent with what I said in my statement, and with what I said to the hon. Member for Sevenoaks (Mr. Fallon). To get ourselves into a situation whereby right from the start we impose conditions on ourselves that mean that we may not get the best deal available would be a mistake. Most people in this House want to see a solution that, ideally, would help Northern Rock move on in the future and also ensure that we can safeguard both the wider public interest and the specific taxpayers' interest. If the hon. Member for Dundee, East (Stewart Hosie) were to examine paragraph 3 of the statement on principles, he would see that that is precisely what the Government set out.

Stuart Bell: The Chancellor of the Exchequer has just repeated what he said earlier, in his statement—that he is trying to balance financial stability, the taxpayer's interest and the depositor's interest. May I assure him that if he follows the line taken by the hon. Member for Tatton (Mr. Osborne) and secures only individual investors rather than institutional lenders, the financial markets would see havoc overnight? May I echo the thoughts of my hon. Friends who represent Newcastle seats—that 6,100 jobs are at stake and that this is a major regional company? What we are seeing in this House is Northern Rock being used as a political football, not a surrogate attack on our financial stability.

Alistair Darling: It would be regrettable if the future of Northern Rock became a political football, and I know that my hon. Friend—who of course represents a seat in the north-east—is very mindful of the effect on the economy of the north-east. I agree that the three principles set out this morning are important. As for the guarantee, perhaps I did not deal with the point raised by the hon. Member for Tatton (Mr. Osborne). Having given the guarantee, I am now invited by him to unpick it—but that would be the wrong thing to do.

Peter Viggers: Surely if a way ahead is to be found, it will be on the basis of known facts. For the Government to plead confidentiality, and for an injunction to be sought to prevent the publication of facts relating to the matter, must be counter-productive. Can the Chancellor specifically confirm or deny that there is a proposal for a five-year subordinated loan stock to roll up the interest on the loan?

Alistair Darling: The hon. Gentleman refers to an injunction that was sought by the company, in which the Government played no part.

David Clelland: Is it not now clear that if either of the Opposition parties had been in power, Northern Rock would already have sunk without trace and 6,000 jobs would have gone down the drain? Is my right hon. Friend aware that whatever the outcome of this, the people of the north-east are at least assured that the Government are doing whatever they can to ensure the future of that business and the thousands of jobs involved?

Alistair Darling: My hon. Friend is right. He has raised that point every time we have discussed the issue on the Floor of the House, and he is right. We owe it to people to do everything we can to help the situation. It is unfortunate that some of those who supported what we were doing at the start now appear to be changing their tune.

Brian Binley: The Chancellor charges the shadow Chancellor with irresponsibility, but many taxpayers believe that the Chancellor may have acted irresponsibly by putting their money at risk. They will not be reassured by the vague assurances that he has given today, unless he is more specific. For that reason, can he tell us the precise value of the free collateral that Northern Rock holds, and how many of its assets are already pledged to other creditors?

Alistair Darling: I do not think that I said that the shadow Chancellor was irresponsible: that is the hon. Gentleman's word, not mine. There are two issues in relation to the point that he makes. It was, and continues to be, right to give Northern Rock both the initial lender of last resort support and subsequent support. The hon. Gentleman almost implies that we should not have done that— [Interruption]—but that would have meant that Northern Rock would have been in substantial difficulties— [Interruption.] Well, that is the implication of what the hon. Gentleman said. As for the loans made by the Bank of England, they are secured in the way that I described in my statement.

Geoffrey Robinson: Is my right hon. Friend aware that Labour Members fully endorse his triple objectives? I wish to remind him, as many of my colleagues from the north-east have done, of the employment considerations. We also fully support him in taking time to find a solution that meets those objectives, but time is also pressing, in that further large loans may come to maturity in January and February and could make the Government's exposure even greater. Therefore, I urge him to make it clear to those with whom he is negotiating that ultimately—if they are very unreasonable and cannot come to terms with the Government on those reasonable objectives—there is an alternative available.

Alistair Darling: I am grateful to my hon. Friend, and I think that I have set out the right approach, although he is right that the situation cannot be allowed to drag on. We need to try to bring the matter to a conclusion as quickly as we reasonably can, consistent with an opportunity to assess the proposals that we have.

George Young: What are the implications for the Government's borrowing requirement of the unexpected multi-billion pound liability for Northern Rock?

Alistair Darling: The position with regard to the Government's borrowing was set out at the time of the pre-Budget report. The Bank of England's lending is being done by the Bank, but clearly the Government stand behind the bank.

Roberta Blackman-Woods: I wonder whether my right hon. Friend is aware that my constituents are very grateful to the Government for the way in which they acted to support Northern Rock depositors and to secure a future for the bank, but that confidence in the bank, and the well-being of my constituents, is not helped by the comments of Opposition Members? Can he tell us whether the public interest criterion will extend to trying to secure a future for the Northern Rock Foundation as well as for the bank itself?

Alistair Darling: I know that many people in the north-east are concerned about the foundation, which has provided support in excess of £24 million for projects. That is important, so I hope that anyone making proposals will bear it in mind; it is one of the reasons why Northern Rock is so appreciated in the north-east. I can only repeat what I said earlier: we will do everything we can to help. There are considerable difficulties, and the period for assessing the proposals will allow us to see whether we can make progress.

John Thurso: In the Chancellor's statement he said that the guarantee for depositors would not be removed without proper notice to depositors. May I invite him to be a little more specific? Surely, without a successful sale, any withdrawal of that guarantee will simply precipitate another run—a terminal run.

Alistair Darling: I was making the point that the guarantee is there and that it will not be removed without warning. I said it would continue as long as current conditions subsist. One of the things that we will consider is future legislation to put in place a long-term deposit protection scheme, as I indicated earlier. What I have tried to do right from the start is to provide stability not just for Northern Rock but for the financial system as a whole, and the guarantee is an important part of that.

George Mudie: Unlike those on the Opposition Front Benches, I remember having welcomed the Chancellor's giving the facility to Northern Rock on the grounds that it would avoid wider financial instability. My memory is better, and I stick by it. I now welcome the spelling out of the priorities in terms of taxpayer and depositor protection, as well as wider financial stability—but has the bank made crystal clear to private shareholders, including the one or two hedge funds that have opportunistically come on board, the reality of their position, and made sure that they approach the private bids with that reality in mind?

Alistair Darling: My hon. Friend raises an important point, and I think the shareholders are aware of their position. Our responsibility in respect of the stability of the financial system is to make sure we can help depositors and maintain the interests of taxpayers as we look for a solution. Those are our objectives, and people should be in no doubt about them.

Andrew Tyrie: On 5 November, the Chancellor appeared to make it clear that any money the Government made available to Northern Rock would be recovered against Northern Rock's assets, but today he has studiously avoided answering that direct question, and studiously avoided providing us with a guarantee for our taxpayers that in the end we will get our money back. Will he now give taxpayers that pledge?

Alistair Darling: I said in my statement—as I have said on a number of occasions—that money lent by the Bank of England is secured against assets such as mortgages held by Northern Rock, so we fully expect to get it back.

Kevan Jones: Northern Rock is the only major financial institution with headquarters in the north-east, and I concur with the sentiments expressed by Members from the north-east who argue that those jobs are important to the north-east economy. Will my right hon. Friend ignore the sanguine voices of Opposition Members, including the former Economic Secretary, the hon. Member for Stratford-on-Avon (Mr. Maples), who said last week that by the end of this week we should let Northern Rock go into receivership? That would be not only disastrous for the north-east economy but bad for the negotiations.

Alistair Darling: I agree with my hon. Friend. It is important that we do everything we can to assist in this situation, and I am sorry that a number of Opposition Members take a different view.

John Redwood: Should the Chancellor not make clear how much money is available and for how long, to avoid a false market in the shares and allow fair evaluation of the bids?

Alistair Darling: No, I think that the approach that we are taking is right. As I said, I wanted to provide Northern Rock with the breathing space to assess the options available to it. We have to make that assessment too, because of the interests that I have outlined. It is important that we take the necessary time to do that, but I have also said that we cannot allow the situation to run indefinitely, for perfectly obvious reasons. To impose an artificial deadline or date would be unhelpful at this stage.

David Anderson: It does not surprise any of us that Opposition parties do not care about 6,000 jobs in the north-east, as they have a track record of not caring about work in the north-east. What is really in the interests of the public and taxpayers is to ensure that neither Opposition party ever again gets control of the financial levers of this country.

Alistair Darling: I have some sympathy with that proposition, too.

Andrew MacKay: As the Chancellor has now been forced to concede that the business editor of the BBC was right to say that the Treasury, too, is loaning money to Northern Rock, the only questions are: how much, at what rates, and when is it to be repaid?

Alistair Darling: I did not say that at all. I said that the element that was being talked about, to which the penal rate of interest has been applied and which is being treated separately, is being made available from the Bank of England—but we expect that to be repaid, too.

Andrew Love: If the board of directors rejects all the expressions of interest by hedge funds that are large shareholders in the organisation, what powers do the Treasury and the Secretary of State have to ensure that we bring the matter to a quick conclusion so that we do not end up with a liquidation, which would be to nobody's benefit, least of all the employees of the bank?

Alistair Darling: The Northern Rock bank has to consider all the options available to it. It is perfectly well aware that the option of doing nothing is not open to it; that just cannot be the position. The Government will remain in close contact with the bank to ensure that it examines all the options. As I have made clear, we need to keep all the options on the table. It would be a big mistake to rule out any one of them.

Graham Brady: Is it still the Chancellor's position that if any other bank were to find itself in comparable difficulties, the same sort of support would be provided?

Alistair Darling: Yes, I have made it clear that the Bank of England's job as a central banker is to ensure the financial stability of the system, so if we were to have another situation with a bank like what happened with Northern Rock, the approach would be clear. That is the job of the central bank in this country, as it would be in any other country.

Jeremy Corbyn: Following on from the previous question, does the Chancellor have any concerns that any other bank, along the lines of Northern Rock, has borrowed excessively on the inter-bank market and therefore put itself and its customers in some danger? Does he have any proposals to change legislation in that respect?

Alistair Darling: I made it clear that I think two things are necessary. One is that the FSA, as it has already said, needs to examine the way in which it regulates banks. It has said, perhaps with the benefit of hindsight, that what was happening in Northern Rock should have been looked at earlier. One thing that we should not lose sight of is the root causes of the problem: Northern Rock had a business model predicated on its being able to get very large sums of money from the financial markets, which simply dried up so that it could no longer get those sums. The FSA accepts that it should have looked at that situation. I have also said that we need to consider whether to make any further changes to the regulatory system, and that is being considered by the Treasury Committee, too.

Graham Stuart: For the elimination of doubt, will the Chancellor confirm that the BBC is wrong, and that no loans whatever have been made by the Treasury, as opposed to the Bank of England?

Alistair Darling: I have explained the position on that element of the loan—the penal rate of interest. I have nothing to add to what I have said in response to previous questions on that subject.

Rob Marris: In the case of Northern Rock, there was no adverse finding by the ombudsman but a 100 per cent. bail-out of savers by Government. In the case of 125,000 pensioners, there is an adverse finding by the ombudsman but currently only an 80 per cent. bail-out. Will my right hon. Friend agree to increase the financial assistance scheme bail-out to 100 per cent., and, if he does not agree to 100 per cent. for those pensioners, can he explain the inconsistency in the Government's position?

Alistair Darling: Financial support for pensioners is a different matter altogether. As my hon. Friend knows, the Government have been considering the position, and I expect that my right hon. Friend the Secretary of State for Work and Pensions, who was at the Dispatch Box just before me, will have something to say about it in due course.

Point of Order

Robert Wilson: On a point of order, Mr. Speaker. I seek guidance on an important matter of parliamentary protocol. The right hon. Member for Redditch (Jacqui Smith), who is now Home Secretary, has been made aware of my point of order in advance. In November 2004, when she was Minister with responsibility for the regions, she made a statement to the House regarding the appointment of new directors to the South West of England Development Agency. An important element of that statement was later found to be inaccurate. I seek general guidance on whether a Minister making an inaccurate statement to the House should also be the Minister who makes the required correction to that statement, and whether a Minister should correct an inaccurate or untrue statement even after some time has passed.

Mr. Speaker: I do not think that that is a matter for the Chair. The hon. Gentleman should put his questions to the Department concerned and seek the rectification that he is looking for. It is not for me to intervene in the matter.

Orders of the Day

European Communities (Finance) Bill

Order for Second Reading read.

Andy Burnham: I beg to move, That the Bill be now read a Second time.
	We have a rare treat today—a Treasury double-header, as Sky Sports might say. The Bill implements the decisions agreed at the December 2005 European Council under the UK presidency and gives effect to the new own resources decision for the financial perspective from 2007 to 2013. That agreement was in our long-term national interest. It is good for Britain and good for Europe, and today I shall explain why. It is good for Britain because it not only preserves our rebate but will see it rise in value during the next six years. It is good for Europe because it provides investment to help the emerging economies of eastern Europe prosper, which in turn and in time will benefit our own economy, as have all previous EU enlargements. The Bill will help to pay for European enlargement.

Graham Brady: rose—

Andy Burnham: So soon? I give way.

Graham Brady: I thank the Minister. He says that under the deal, the British abatement will increase. Will he confirm, though, that Britain's net contribution to the EU budget will increase by £2.3 billion a year?

Andy Burnham: I will come to the changes implemented by the decision, but the point that I was about to make when the hon. Gentleman intervened is that it is not enough for the Conservative party to say that it is a supporter of European enlargement; it is not enough to support the end goal without taking the sometimes difficult decisions that will allow that goal to be met. It is simply not good enough to flinch from decisions on the issues that stand in the way of making EU enlargement a success. I shall return to his precise point and make the positive case throughout my remarks.

Daniel Kawczynski: The Minister mentioned that the agreement will benefit eastern European states, but is he aware that some of those states are already struggling to spend the money that they have been given, and that they have a big backlog of money from the European Union that they have not been able to spend?

Andy Burnham: I respect the hon. Gentleman's knowledge of eastern Europe, but he will understand that the rate at which countries can draw down allocations from the EU budget determines the size of the contribution that others make. He will understand that the position of the wealthier nations is protected.

John Baron: The Minister will remember that the Government's original position was that the rebate would be given up only if there were meaningful reform of the common agricultural policy. Given that there has been none and that, having sacrificed our rebate—or a large part of it, anyway—we will pay in 20 per cent. more than France in the coming years, but get back only half what France gets back, does he understand why British taxpayers believe that they are being short-changed by the Government?

Andy Burnham: The hon. Gentleman has raised a range of points that I will address in the substance of my remarks. As I have said, I want to make a positive case for what Britain agreed in 2005. That agreement brought Britain and France into rough parity on net contributions to the European Union. The Government made a clear request for a review of the European budget as part of that agreement, which we secured. We can address all the hon. Gentleman's points.
	Today, I expect to hear variations on the refrain that what is good for Europe cannot possibly be good for Britain and that Europe's interests and Britain's interests are essentially incompatible, and I intend to meet that argument head-on. The Government reject that isolationist and negative thinking, although we do not uncritically accept everything that Europe says. The deal secured by the Prime Minister and the former Prime Minister, Tony Blair, is €160 billion cheaper than the original proposals from the European Commission.

William Cash: Will the Chief Secretary indicate in straightforward and simple language how much less will be made available to the regions of the United Kingdom from funds such as the structural funds?

Andy Burnham: I will come on to that point in my remarks, if the hon. Gentleman will hold his horses. I ask him head-on whether, if he supports the EU, he supports enlargement. If so, will he accept that a contribution should be made by this country to the cost of enlargement? As English regions improve their competitiveness, as I am pleased to say Merseyside has recently done, is it not right that the available funds should go to support the regions of Europe that most need that extra investment?

Julia Goldsworthy: The Chief Secretary is right that it is important that the parts of Europe that need structural funds receive them. Cornwall, in which my constituency is situated, will continue to receive those funds. Does he agree that the funding available is also based on the amount of match funding available from the Government? It is unfortunate that the Government are not match funding at similar levels to those achieved on objective 1 funding.

Andy Burnham: The hon. Lady is right on that strict technical point. I hope that she accepts that Cornwall will continue to benefit from structural and cohesion funding. To pick up the point made by the hon. Member for Stone (Mr. Cash), funds will continue to be available to the less well-developed regions of Britain. Merseyside has recently improved its competitiveness, but challenges remain in Cornwall and, I believe, the western highlands. Parts of this country will still benefit substantially from funding to improve their competitiveness.

Ian Davidson: Many of us are and always have been in favour of expansion and of contributing money to the new accession countries, but why is France the biggest recipient of funding from the EU budget? The Chief Secretary, the present Chancellor and the present Prime Minister should not get the blame for this appalling document, because we can all agree that a bad boy did it and ran away.

Andy Burnham: My hon. Friend knows my background, and I do not agree with him at all. Indeed, it is possible to argue that in this financial perspective we make ground on the traditional complaint aired by many Eurosceptics over the years. I am comfortable with the deal. I come back to where I started: the deal is good for Britain and shows that Britain is a middle-ranking net contributor among the wealthier nations.

Denis MacShane: If the Minister cares to read page 32 of the excellent paper prepared by the Library for this debate, he will see in the final column on net contributions for 2006, which is before the next budgetary round kicks in, that France made a net contribution of €3,140 million and the UK made one of €4,086 million. France is therefore up with the UK and Germany as a major net contributor. I am afraid that the notion that France is a net recipient is 20th century truth, but 21st century mythology.

Andy Burnham: My right hon. Friend is absolutely correct: France is a net contributor, as is this country. As I have just said, France's contributions will grow twice as fast in this financial perspective—as, incidentally, will Italy's. That is why I come back to the point that the agreement is good for this country.
	Let me give an indication of the net contributions that we will make. Table B11 of the pre-Budget report document shows that the estimates for the net expenditure transfers to EC institutions are £5.6 billion for 2007-08, £5.5 billion for 2008-09 and £5.7 billion for 2009-10.

Philip Hammond: The Minister has mentioned France's and Italy's net contributions. In the interests of transparency, will he give a commitment to the House to publish official Treasury estimates of the net contributions of all member states? My understanding is that, to date, the Treasury has officially published only an estimate of the French net contribution.

Andy Burnham: I should say to the hon. Gentleman— [Interruption.] If he holds his horses, I shall give him his answer. It is not common practice for one EU state to publish details about others in a haphazard and cherry-picking way; the Commission makes those figures available. I have said clearly this afternoon that, on the basis of figures in the public domain, Britain's net contributions will be in rough parity with those of the French. I hope that he is satisfied with that answer.

Philip Davies: rose—

John Redwood: rose—

Andy Burnham: I shall give way first to the right hon. Gentleman and then to the hon. Gentleman.

John Redwood: Will the Minister tell us what our total gross contribution as a country will be between 2007 and 2013?

Andy Burnham: I will answer the right hon. Gentleman, but Members are tempting me to the meat and detail of my speech before I have reached them. The overall gross contribution will rise—the figure is a rough one; obviously, we are talking about forecasts—by about 3 per cent. a year during this financial perspective. I shall come directly to the figures later. Obviously, there was a bigger increase in the net contribution rather than the gross contribution.

Philip Davies: rose—

Andy Burnham: I apologise to the hon. Gentleman; he has waited a long time.

Philip Davies: The Minister has been generous in giving way. He takes the view that the deal is good for Britain and that spending all that money is in our interest, and I disagree fundamentally. The Court of Auditors has refused to sign off the accounts for the 13th year running. Even if one accepted the Minister's argument, one would still have to ask how on earth he can say that it is in British taxpayers' interests to keep giving more and more money to a body open to so much fraud and whose accounts the auditors will not sign off. Is there, anywhere in the world, any other organisation whose accounts have not been signed off by auditors, but to which the Treasury would agree to keep giving more and more money?

Andy Burnham: I hope that the hon. Gentleman will keep his seat, because I am going to read out one of his own quotations later—a treat that we can all look forward to. The statement issued by the Court of Auditors last week showed some progress, but it was disappointing, and there needs to be further progress. Let me refer him to a report by the House of Lords on this issue, which states that
	"the failure to give a positive Statement of Assurance does not tell the whole story...Firstly, we argue that a lack of a positive Statement of Assurance does not necessarily indicate that high levels of fraudulent or corrupt transactions have taken place."
	 [ Interruption. ] I simply refer the hon. Gentleman to that learned document on the European accounts, which he should consider before he indulges in his sweeping and ill-informed generalisations about what those accounts mean.

William Cash: May I try to correct something on which I think that the Minister—I say this in all fairness—misled the House just now, as did the right hon. Member for Rotherham (Mr. MacShane)? "Misled" is perhaps overdoing it, but they inadvertently got their figures a little muddled. The figures on net contributions per head, which are of extreme interest to individual members of the electorate, produce a quite different answer from that proposed by the right hon. Member for Rotherham. In the United Kingdom, we pay €124 per head, which is the third most. Denmark pays the second most, with €127, and the Netherlands pays the most—€241. Germany's net contribution per head is only €100, while France pays only €50. Does not that rather blow his argument out of the water?

Andy Burnham: I know that the hon. Gentleman gets heated on these matters, but I urge him to use temperate language. I have not misled the House. He has brought his own set of figures to the debate. The point that I was clearly making was that on the basis of gross national income, the agreement that we are about to discuss—I hope that he will begin to let me discuss it in more detail—leaves France and Britain in rough parity in terms of our overall contributions to the EU budget. I stand entirely by what I said.

Denis MacShane: Assuming that the hon. Member for Stone (Mr. Cash) is reading from the same document as me, the UK is at the bottom of the column, where it says that the figure is €68 per head. He read out the Swedish figure of €124 per head. I am tempted to say something to him in Swedish, but it would be helpful if he were able to read a column of figures before contributing to the debate.

Andy Burnham: If anybody is watching at home, I will leave it to them to draw their own conclusions about who has been misleading the House.

Madam Deputy Speaker: Order. I think that we should now move on. People are quoting different sets of figures, which are matters for debate. Perhaps we can now proceed.

Andy Burnham: A visit to an optician's in Stone might be in order, too.
	This Government will continue to make the positive case for an enlarged and prosperous European Union as being directly in our national and economic interest. Britain benefits from being part of an open, prosperous Europe of 500 million people. The EU is Britain's largest market by far, and—I hope that Conservative Members will listen to this point—it follows that British business needs a Government who engage constructively in discussions about the operation and rules of that market. It is precisely because we engage constructively, rather than grandstanding and posturing, that we secure results that are in the national interest.
	To aid our debate today, let me put some facts on the table. First, the Bill and the agreement that it implements will preserve the British rebate in full on all spending on the EU15 and on all agricultural spending on the EU27, irrespective of their accession dates. The abatement has the same basis as it did at its inception at Fontainebleau in 1984. The rebate will be disapplied only on non-agricultural expenditure, which primarily supports economic development in the member states that have joined the Union since 30 April 2004.

Peter Bone: Will the Minister give way?

Andy Burnham: I shall give way to the hon. Gentleman, but let him answer this question: does his party support helping those countries to improve their economic development?

Peter Bone: The Minister said that it was in our economic interest to be in the European Union. When we went into the Union, we had a trade deficit with the EEC of £1.327 billion. That was recalculated to be £11.3 billion, and today's balance of trade deficit with the European Union is £38 billion. That represents 80 per cent. of our trade deficit. When we went in, it was only 50 per cent. How is that an economic positive?

Andy Burnham: I fear that some more dodgy Tory figures are being quoted there.

Peter Bone: On a point of order, Madam Deputy Speaker. Those figures were given to me by the Library.

Madam Deputy Speaker: That is not a point of order for the Chair, but the matter is now on the record.

Andy Burnham: I am glad about that.
	The hon. Gentleman may not like it, but the EU is our largest trading partner. It accounts for 57 per cent. of our economy, and if he is arguing against that, I would like to see him justify what he says to the businesses in his constituency.

Quentin Davies: Will my right hon. Friend take it from me, because I know a tiny bit about it, that Conservative statements on this matter have to be treated with the greatest degree of scepticism? A large number of Tories have no problem at all in making completely contradictory statements on anything to do with the EU because their actual agenda is to destroy our relationship with the Union in the first place.

Andy Burnham: My hon. Friend says it all. There speaks the true voice of experience and reason in this debate.

Chris Bryant: I hope that the true voice of reason will continue now. The more important point about workers in this country is that if the new accession countries had not come into the European Union, they would still have been competing with Britain on jobs, but on the basis of weaker health and safety regulations and weaker workers rights; they would have been competing in the bargain basement. We need them to develop economically so that we can all compete on the basis of added value.

Andy Burnham: My hon. Friend makes an incredibly important point that produced silence from the Opposition Benches. Outside this Chamber, British businesses will understand his point and why it holds true for them and the competitiveness of this country. It is also true that the amount of trade that this country has with the A8 countries has increased significantly since their accession to the EU. It is a question of having not just a level playing field, but more trade as well. That has got to be good for the British economy.

Philip Hammond: The right hon. Gentleman is making a valiant attempt to defend the indefensible. If the deal is such a good one for Britain, will he tell us why, when the previous Prime Minister came back from Brussels with it in his knapsack, the present Prime Minister ran around briefing every journalist he could get his hands on that it was a bad deal for Britain and that he would never have signed up to it?

Andy Burnham: This was a deal that the former Prime Minister and the current Prime Minister jointly agreed, and if the hon. Gentleman and his hon. Friends will let me, I want to explain why. He has not exactly given me a chance to do so in the debate so far.

Si�n Simon: Will the Minister explain, because we find it difficult to understand, why Conservative Members interrupted him when he was talking about the disapplication with regard to economic development in accession countries in order to tell him about the deficit? How on earth can British markets be expanded unless economies are developed and expanded in the rest of the Union? It is economic illiteracy, and it is ridiculous.

Andy Burnham: It certainly is, and I am grateful to my hon. Friend for making the point. Any informed commentator listening to this debate outside will understand what he has just said. I would be interested to hear the discussions that the Opposition have with the CBI on such matters, because many of its members take a very different view from that which they put forward.

Daniel Kawczynski: Will the Minister give way?

Andy Burnham: I would very much like to make some progress from my first point, and that is what I shall do.
	Secondly, on latest forecasts the rebate will rise in value over this financial perspective, not fall, to an average of 6 billion a year from 2007. As the former Prime Minister told the House, overall the abatement will get us back around 41 billion in this budget period, which is more than in the last one. Thirdly, the agreement will see sensible, restrained growth in the overall budget. The latest forecasts are that the budget will fall below 1 per cent. of EU gross national income in commitment terms by the end of the financial perspective. Overall, the budget will grow by just 7 per cent. across the financial perspective, as compared with growth of 17 per cent. in 1988 and 22 per cent. in 1994. I wonder which Government negotiated those EU budgets.

Ian Davidson: May I clarify one point with the Minister? He says that our rebate is going up, but will he confirm that the rebate is a percentage of the difference between what we pay in and what we receive back? If the rebate is rising, the gap between what we pay in and what we receive is also rising. Rather than being enthusiastic about the rebate rising, we should look for it to fall, so that our gap falls, too. Surely that is the case.

Andy Burnham: My hon. Friend is correct that that is how the rebate is calculated. Indeed, the first line of article 4 of the Council decision on own resources says:
	The United Kingdom shall be granted a correction in respect of budgetary imbalances.
	Those on the Opposition Benches who claim that the rebate has been lost in the decision simply have not read the own resources decision. My hon. Friend's point about the gap is correct, but that is because there is a disapplication of the rebate on economic and structural spending in the new member states, as I have explained. With those countries having been welcomed into Europe, our judgment is that the right thing to do morally is equip them to compete competitively. If we did not do that, we would be in breach of our responsibilities as a full member of the European Union. That explains the gap to which my hon. Friend has drawn the attention of the House.
	Let me put on record more facts about the Bill. Fourthly, in response to the right hon. Member for Wokingham (Mr. Redwood), the UK's contribution is forecast to rise on average by 3 per cent. in real terms from 2007 to 2013. Fifthly, in answer to my hon. Friend's question a moment ago, new member states will receive 158 billion in structural and cohesion funds in this financial perspectivea 250 per cent. increase on the previous financial perspective period. The share of new member states' receipts will rise from 24 per cent. of the total to 56 per cent. in 2013. Lastly, because of the shift in spending from west to east, all wealthier nations will see their net contributions rise, some by more than others. In this financial perspective, French and UK net contributions will be in rough parity, with French and Italian contributions rising twice as fast as ours.

Rob Marris: If we cut to the chase, are there not two key questions? One is: is the United Kingdom a member of the European Union or not? It is a club and there is a price to pay for belonging to a club, and I think that the price is well worth paying. The second question, the answer to which ought to be clear on the Labour Benches at least, is: are we in favour of redistribution of wealth? We certainly are on these Benches, particularly with regard to the Government's magnificent record both in international development and within the European Union, with redistribution of wealth from the west to the east, so that ultimately we will all be richer. So I have two questions: are we in or are we out, and are we in favour of redistribution of wealth?

Andy Burnham: I say yes to the first question. My hon. Friend has tempted me to give a non-new Labour answer to the second question, so perhaps a fudge is in order [ Laughter. ] I am joking, of course. He has made his point incredibly well. Let us cut to the chase, as he suggested. We support making a contribution to help the countries of eastern Europe to prosper. That is the crux of this debate. That is the difference. Let me get to that point.
	The Leader of the Opposition said in a speech in March this year:
	The British Conservative Party has long championed EU enlargement...In recent years, the transition from Soviet totalitarianism took place more smoothly than many imagined possible, thanks to the prospectnow fulfilledof EU membership for the countries of Central and Eastern Europe. But the work is not yet done.
	He is right; the work is far from done. The economies and infrastructure of the new EU member states need considerable investment and support before those states will be able to compete in the market on an equal footing, and that process of regeneration is now just beginning in earnest. The Leader of the Opposition is the self-styled champion of those countries, but what kind of champion does the easy bit, providing the fine words, but then looks shiftily away when asked to back up those words with real financial commitments from the wealthier, established EU nations? The countries of eastern Europe need real champions who are prepared to step up to the plate, not fair-weather friends whose words are worth nothing at all.

Daniel Kawczynski: I feel very cross with the Minister for suggesting that we do not want to help the eastern European countries. My grandfather came to this country from eastern Europe during the war, and we on the Opposition side of the House feel passionately about those countries. Our problem is that we do not expect the United Kingdom to have to stump up all the cash; France, Germany and the others should do so as well. The Minister's comments are outrageous.

Andy Burnham: Perhaps the hon. Gentleman's are, too. How on earth can he justify voting against the Bill tonight, if he says that he favours providing the support to help the economies of eastern Europe? How on earth can he troop through the Lobby to oppose the Bill when all the wealthier nations of Europe have agreed to make contributions to aid the economic development of eastern Europe? As I said to the hon. Member for Falmouth and Camborne (Julia Goldsworthy), Cornwall has benefited from structural funding, as has Merseyside. We have seen their economies improve. Ireland and Spain have benefited from the funding, and their economies have also improved. All our business benefits from those enhanced and improving economies, yet the hon. Gentleman wants to deny those opportunities to the economies of eastern Europe, even though his party claims to support them. That is disgraceful.

David Heathcoat-Amory: The Minister's case seems to be that public expenditure in eastern Europe is bound to be a good thing. Would he, however, put his own money into a company whose accounts had been rejected by the auditors for 13 years? If not, why does he want to increase the sum of public money to be committed over seven years, when the European Union has failed its audit test for the past 13 years?

Andy Burnham: Because I favour the development of the European Union and the peace and prosperity that the European Union has brought. It is delivering unparalleled living standards to its member states, principally the member states of longest standing. That is how I justify the measures. If the right hon. Gentleman had been listening to me, he would know that I said that they would bring much-needed social and economic regeneration to the parts of Europe that most need it. The long-term benefit of those arrangements will come to our economy, because they will increase our trade with those countries and build more prosperity in them. As my hon. Friend the Member for Rhondda (Chris Bryant) said a moment ago, they will also create a level playing field on which British companies can compete with companies in those countries when selling goods into the world market.

Philip Hammond: Perhaps we can get back to focusing on the Bill. Will the right hon. Gentleman confirm that its purpose is to incorporate the own resources decision into the definition of the European treaties? It is not going to make any difference to the spending budget. It is about how the cost of meeting the budget is divided up between the member states.

Andy Burnham: The hon. Gentleman is being extremely nit-picking. I invite him to read the own resources decision, and to look at the table in it that spells out how the rebate will be retained on all agricultural spending, and on all spending in the EU15. As I have describedit would be good if the hon. Member for Runnymede and Weybridge (Mr. Hammond) read the decision before making his claimsit spells out how the rebate will be disapplied in respect of economic and structural spending in the new member states. That is how it affects the overall budget. Yes, there is an annual EU budget process, but it is informed by the own resources decision, which the hon. Gentleman has clearly not bothered to read.

Si�n Simon: Assuming that these are the same Tories who so recently raised xenophobic mayhem about the number of eastern European migrant workers in the UK, can the Minister explain what he believes is more likely to be the effect of the sort of economic development in eastern Europe that the measure is underwriting on the very ways of these migrant workers who were so recently subject to such disgraceful scaremongering by Conservative Members?

Andy Burnham: My hon. Friend is absolutely right to point to that complete contradiction. As we have seen with previous EU enlargements, there may have been an immediate increase in the number of people using their ability to move around Europe, but in the long term people are more likely to return to their country of origin, particularly if that country is experiencing economic development and prosperity. This is a long gamenot a short-term gimmick to be played in the House this afternoonthat will bring benefits over a generation rather than over a few months. My hon. Friend is absolutely correct.

Kelvin Hopkins: My right hon. Friend is struggling manfully to cloak his dodgy deal in respectability by constantly focusing on help for eastern Europe. If we were asked for a simple straight fiscal transfer to help eastern European countries, that would be one thing, but the reality is that Chirac attacked our rebate simply because we were threatening the common agricultural policy once again. If we got rid of the CAP, we could all give generously to eastern Europe.

Andy Burnham: My hon. Friend may be in search of perfection, but we work within the existing structures to improve and make steps forward where we can. He will know that as part of this package, a commitment was secured to review the operation of the CAP and we intend fully to engage in that review. Generally, I would remind my hon. Friend that this is a good deal for the reasons that I am outlining. I cannot help it when I am drawn by interventions on other points, but I am firmly making a positive case today.

Ian Davidson: I am grateful to my right hon. Friend for giving way, which is helpful in allowing us a degree of dialogue. I want to make it clear that I do not believe that he is one of the bad boys, but I do think he is a bit of a rascal in seeking to polarise the debate by suggesting that anyone who has any reservations about any negotiated settlement is necessarily in favour of withdrawing altogether or of giving nothing to eastern Europe. That is most certainly not the position of Labour Members who have reservations. Surely the Minister would accept that we have made virtually no progress in reforming the CAP during this settlement and that although the submission of additional money for eastern Europe is welcome, it does not necessarily go to the right people there. It is almost entirely devoted to channelling the common agricultural policy, which, certainly in this country, helps the undeserving rich rather than the deserving poorso will the Minister resign?

Andy Burnham: Thanks very much! I know that my hon. Friend is feeling bad because Scotland lost at the weekend, but that is no reason for him to take his nastiness and resentment out on me. This financial perspective does include reform of the CAP. I do not have the precise figures to hand, but it drops reasonably significantly as an overall percentage of the budget and member states are being asked voluntarily to shift spending away from simple direct support into helping improve the sustainability of local rural economies. So, yes, there is reform. If my hon. Friend is asking me whether that is enough, I would have to say no. We want more reform of the common agricultural policy. That is the very clear position of the British Government and we believe that we have secured the meansthrough the review of the processto achieve it. It is not perfection. I am not arguing that the EU budget and the recently agreed own resources decision represent perfection. We have made progress and continue to do so, because that benefits us all.

Chris Bryant: Many people may be right to argue for CAP reform, which we would all like to see for moral reasonsnot least to do with our trade with Africa and South America. However, does the Chief Secretary accept that we have to recognise that if we did not have the CAP that would probably mean that the French would give money to French farms and the Polish to Polish farms and that the amount of subsidy would increase rather than decrease? That was why Tory Governments always argued that there should be a strong CAP.

Andy Burnham: I suspect that they said that because they knew that that would benefit many constituencies represented by Conservativesit is not something that we hear from Conservatives very often. My hon. Friend has made an important point.

David Gauke: The Chief Secretary said that CAP spending will fall as a percentage of the EU budget as a whole, but according to figures produced by Open Europe it will rise slightly. Will he confirm that in real terms the CAP budget will increase by 12 per cent. in total spending from this financing period to the next?

Andy Burnham: Of course, the overall budget is increasing in size. The figures to which I referred a moment ago in answer to my hon. Friend the Member for Glasgow, South-West (Mr. Davidson) were percentages of the overall budget. I was trying to illustrate that the overall percentage of spend from the EU budget on agriculture will decrease in this financial perspective. I do not doubt the figures that the hon. Gentleman mentioned, but comparing the overall percentage gives a better indication of how agriculture spending is being reformed in this financial perspective.

John Baron: The Chief Secretary is being very generous and is encouraging a proper exchange of views. He is being slightly disingenuous in the sense that he is forgetting the fact that the Government's original position was that we would not sacrifice any part of our rebate unless there was reform. He has said that there may be reform, but how can there be reform when the French have publicly stated that they will veto any cuts to any future CAP spending?

Andy Burnham: The rebate exists because of distortions in the way that money is spent around the EU. The rebate will remain as long as that is the case. That is the clear position of the Government. I said to the hon. Member for South-West Hertfordshire (Mr. Gauke) that I did not doubt the figures that he gave, but our figures say that the CAP budget will decrease from 55 billion in 2007 to 51 billion in 2013. The Conservative Front Benchers need to check their figures a bit more before they come rolling into a debate such as this and making all sorts of big claims, as they have been.

Julia Goldsworthy: Does the Chief Secretary agree that there are concerns that pillar two of the CAP is being cut, when more resources should have been switched to it? An opportunity was lost to try to undertake such reform.

Andy Burnham: The hon. Lady makes an important point. The agreement invited member states voluntarily to move spending from pillar one to pillar two. If my memory is correct, the UK has decided to switch about 14 per cent. of overall agricultural spending. That is indicative of our desire to see reform in the way in which support to rural communities is spent. We hope that other countries will do the same. In the long term, it is our aim for all agricultural spending to be migrated in that way.

Denis MacShane: Conservative Members have suggested that France will veto any reform of the common agricultural policy. However, page 27 of today's economic section of  Le Figaro statesI shall not read it out in Frenchthat France, the principal beneficiary of the CAP, already knows that it will have to adapt to a lowering of agricultural expenditure in the EU. I could read more from the article. Conservative Members should get up to date.

Andy Burnham: As a simple lad from the north-west, I have never read page 27 of the economics section of  Le Figaroperhaps I should. My right hon. Friend makes a good point, which illuminates our proceedings.

Philip Davies: The Chief Secretary said earlier that giving more money to countries in eastern European would benefit British business. Local businesses in West Yorkshire want more money for local infrastructure to help transport. The Government cannot afford to give it. According to them, it is all about spending priorities. Is the right hon. Gentleman genuinely trying to argue that businesses in West Yorkshire will benefit more from building up the infrastructure in eastern Europe than from doing that in West Yorkshire?

Andy Burnham: The hon. Gentleman betrays alarming ignorance of those matters. Businesses in West Yorkshire have benefited over the years from European structural and cohesion funding. I am now looking at details of programmes throughout Yorkshire that support the growth and competitiveness of the region. Why does not he recognise and celebrate that rather than trying at every opportunity to whip up anti-European feeling?
	It is in our national interest for our net contribution as a percentage of national income to be roughly equal to that of France and less than that of the Netherlands, Germany and Denmark. That confirms Britain as a middle-ranking net contributor among the wealthier nations. It also fulfils our long-standing commitment to budget discipline. In 1994, a budget of 1.2 per cent. of EU gross national income was agreed. In the current financial perspective, the budget will be less than 1 per cent. of EU GNI, which is nearly 20 per cent. lower. That represents a saving of 160 billion compared with the Commission's original proposal. For the first time, CAP spending will not be the largest item of expenditure in the EU budget. Instead, it will be sustainable growth. The budget is disciplined, with a fair contribution from Britain, which preserves our abatement. The Bill will secure our national interest.
	However, there is a bigger picture to consider. It is emphatically in Britain's long-term interest to provide for the fair financing and enlargement of the European Union. We thus bring British business immediate market opportunities and secure Europe's long-term competitiveness. Achieving a fair deal was the challenge that faced the UK presidency in 2005, but we met it. It means that new member states will experience a 250 per cent. increase in structural funding on the previous financing period.
	Britain has been a strong supporter of enlargement and we are proud of the part that we played. That enlargement has made a huge contribution to establishing our central and eastern European partners as the free democracies and vibrant economies that they are today. It is right that we should stand by them and that they should not be denied the economic investment that has benefited Britain and other parts of western Europe so much. As I said earlier, it is also firmly in our interest. Allowing our partners in central and eastern Europe to grow and develop strengthens them and strengthens Europe, making us all more secure. A more developed Europe will be better able to meet the common challenges that we face, such as climate change and security.  [Interruption.] I can hear Conservative Members chuntering. We have heard about attempts by the Leader of the Opposition to form a new political party in the European Parliamentthe grandly named Movement for European Reform. It sounds good, but the problem is that there is neither much European nor a great deal of movement about it. So far they have recruited the Czech ODS party and, to fanfare earlier this year, the Bulgarian Union of Democratic Forces party. There has, however, been a slight setback. On 14 September, the president of the European People's party, Wilfred Martens, said:
	Six months ago, I said that it is not compatible for a member party of the EPP to join initiatives like this 'movement' and at the same time remain in our party. Today I am glad that the UDF understands and shares our position.

Daniel Kawczynski: On a point of order, Madam Deputy Speaker. The matter commented on by the Chief Secretarythe internal relationships of the Conservative party with its sister parties throughout the European Unionhas nothing to do with the EU rebate.

Madam Deputy Speaker: Order. The occupant of the Chair will determine whether a comment is in order.

Andy Burnham: If the hon. Gentleman listens, he will find that my point is far more pertinent than many of the interventions that I have taken in the debate so far.
	As I was saying before I was rudely interrupted, the EPP announced the withdrawal from the Movement for European Reform of the Bulgarian UDF. So then there were two. Incidentally, one of them sees no need for a referendum and is in favour of the new EU reform treaty. What does that leave? It leaves the British Conservative party completely isolated in Europe. Is that what British business needs from a party seeking to represent business interests in this country's biggest single market?
	I hope that the hon. Member for Runnymede and Weybridge will enlighten us on progress in the establishment of the Movement for European Reform. Can we conclude that nobody wants to join this new Tory club? Might some of the Conservatives' potential new friends have been put off by their weasel words on the financial commitment that they are prepared to make to the enlargement of the European Union? I hope that he will address those points later. One of his MEPs, Caroline Jackson, has said:
	I don't know how David Cameron will deal with the pledge

Madam Deputy Speaker: Order. We have heard a sufficient amount on that topic now. Perhaps the right hon. Gentleman will move on.

Andy Burnham: I hope that the hon. Member for Runnymede and Weybridge will enlighten us, as we deserve to be told. He and his colleagues have been left completely isolated in Europe.
	We are making this case today because it is in our enlightened self-interest to support enlargement.

Philip Hammond: The right hon. Gentleman has thrown up lots of smoke over the past few minutes. Let us get back to the main point. He is saying that giving up the rebate is in Britain's interests and is the right thing to do. Why, then, did his previous Prime Minister go off to Brussels with a position that the rebate was non-negotiable?

Andy Burnham: The hon. Gentleman keeps saying that we are giving up the rebate, but he has not listened to a word that I have said this afternoon. The own resources decision outlines in detail the arrangements for the British rebate. Perhaps he will read that again before making a further intervention. I have said to him that the basis on which the rebate is calculated remains the same for the EU15 and is being disapplied in respect of structural and cohesion funding in the new member states. He disagrees with that position. I have simply been making the point, particularly in relation to his and his right hon. and hon. Friends' efforts to woo partners from eastern Europe, that their failure to back our commitment, and to put up real resource to support the commitment to enlargement, means that nobody wants to join this new Movement for European Reform. They are on their own in Europe. All the western European economies have agreed to make this contribution to improve the competitiveness of eastern Europe. The Conservatives are completely isolated.

Philip Hammond: Does the right hon. Gentleman recall one of his predecessors as Chief Secretary to the Treasury, the right hon. Member for Oxford, East (Mr. Smith), saying about the rebate and enlargement:
	we will benefit from abatement on any new expenditure incurred as a consequence of both enlargement and the ceilings in the existing EU 15... the United Kingdom will benefit very considerably from the application of the abatement to any new expenditure on enlargement.?[ Official Report, 3 July 2001; Vol. 371, c. 145.]

Andy Burnham: I cannot make myself any clearer to the hon. Gentleman than I already have. I told him at the beginning that the value of the rebate rises in this financial perspective. I have also told him that Britain receives immediate economic benefits from increased trade with the new member states, and will in time receive even greater economic benefits.
	It is possible that people in those new member states listen to these debates. They will note the position taken by the British Conservative party, and they will hear those words about having always championed enlargement. What are they to conclude when the hon. Gentleman and other Conservative Members argue against the funding that will make an enlarged European Union more prosperous, and stand in the way of all the progress that they claim to want?

Graham Brady: If this is such a good deal for Britain and our eastern European friends, why did the then Chancellor of the Exchequer seek to reopen negotiations when it was brought back by the then Prime Minister? Why did he think it was such a bad deal then?

Andy Burnham: The hon. Gentleman is now raising spurious points. I think I owe it to you, Madam Deputy Speaker, to make some progress.
	Overall, the single European market has created an additional 2.75 million jobs across the EU in the 15 years since it was established, and increased gross domestic product by 2.2 per cent. or 225 billion. Enlargement is strengthening and widening that single market: it is now half a billion consumers strong, and the largest market in the world. That helps our partners to grow, and helps make Europe more prosperous. It is not to our cost, but to our benefit.
	Let us look at the facts of earlier enlargements. After the 1986 enlargement, United Kingdom exports to Spain increased by a quarter. After 1995, exports to Sweden rose by a similar amount. The benefits that EU membership can have are demonstrated by the fact that since our closest neighbour, the Republic of Ireland, joined the EU it has received almost 53.5 billion from the EU budget. Between 1993 and 2003, the EU supported more than 120 major infrastructure projects. That has helped Ireland's exports rise from 1.1 billion in 1973 to 88.4 billion by 2005. In 2003, gross national product per capita was more than three times its 1973 level in real terms.
	Ireland also demonstrates that the economic development of our partners is good for Britain, a point entirely lost on Conservative Members. It increases trade, and creates new opportunities and new jobs. Between 1998 and 2006 alone, UK exports to Ireland have doubled. Such development has particularly benefited Merseyside, which is one of this country's poorest regions and receives objective 1 funding.
	The Conservative party's claim that the Bill secures us nothing in return is self-centred and narrow-minded, but also wrong. As I have said, the Bill will disapply structural and cohesion funding, and in time that spending will benefit Britain. Just as development funding in Ireland helped Britain to increase trade from a buoyant Irish economy, we will gain the long-term benefits of a prosperous eastern Europe.
	Already British firms are making the most of the opportunities that the recent accessions have brought. In 2006, UK exports to the A8 countries amounted to 8.8 billion, a 36 per cent. increase in the first full year after accession. Tesco, Unilever, Vodafone, BP and International Power are already investing in our new single-market partners, and UK foreign direct investment in the A8, which averaged just over 860 million in the three years before accession, was more than twice that amountnearly 2 billionin 2005, the year after accession. Enlargement is good for those economies, and provides economic opportunities for our largest companies.

Rob Marris: I think that my right hon. Friend is being a little unfair to the Conservative party. After all, widening rather than deepening was John Major's policy, and he was absolutely right in that regard.
	I believe that some Conservative Members recognise that the enlargement of the European Union is good for the UK economy. What they do not understand are negotiations. I spent a great deal of my professional life negotiating in business, in the private sector, and I know that if one obtains all that one wants in negotiations with a partner with whom one frequently negotiates, that partner will get back at one next time. The Conservatives do not understand that there is wave upon wave of negotiations in an entity such as the European Union, and that if one pushes too hard for something on one occasion, one will not obtain it on the next. They do not understand the need to play it for the long term.

Andy Burnham: My hon. Friend is absolutely right, and what we have witnessed this afternoon provides ample illustration of the very point he makes. Conservative Members will make knee-jerk statements to please the newspapers and party members in their constituencies. They will come out with such rhetoric because they know it will be good for their personal standing within their local Conservative party when they next return to their constituency for a meetingthey will probably pass around the relevant volume of  Hansard. What that does not do, however, is show any understanding of proper negotiation in Europeof how to get a good deal for Britain and be a constructively engaged partner in EU discussions. They have not learned anything from their previous failures in this area.

Ian Davidson: The Minister is displaying a degree of cruelty that I had not expected. Being nasty to the Conservatives on this matter is too easy; the phrase fish in a barrel springs to mind. Does he agree that simply because the Conservatives are bad, it does not necessarily mean that we have to accept everything that the European Union puts in front of us? Does he not agree that this is, in fact, not a particularly good deal for us?  [Interruption.] Does he not agree that while we are in favour of expanding the EU there is no reason why we should pay for it disproportionately, and that we have effectively been taken to the cleaners and [Interruption.]

Madam Deputy Speaker: Order.

Ian Davidson: Thank you, Madam Deputy Speaker. There are times when support from the Opposition Benches is not helpful.
	Does my right hon. Friend agree that simply because something is good for the EU as a whole, that does not necessarily mean that it is automatically fully good for us? Will he also remind us whether he and his colleagues were in favour of joining the euro, and

Madam Deputy Speaker: Order. The hon. Member has made his point.

Andy Burnham: Interestingly, on that last point, in fact I was not; I am happy to put that on the record today.
	I say to my hon. Friend that I am just making a positive case for Europe and for our engagement in it. Opposition Members might think that someone such as me might be defensive on these matters, but that is not the case at all. I have come to the Chamber today to say that the deal was not perfect in every respect but it serves our interests and moves us forward, and it moves the EU forward. I am quite happy and comfortable to be standing at the Dispatch Box making that case.
	There are wider economic benefits. Migration from central and eastern Europe is much discussed and I recognise the challenges it poses to some of our communities, but there are indisputable benefits to British business and the British economy. A8 migration contributed about 6 billion a year to the British economy between autumn 2001 and the middle of last year, and those workers from central and eastern Europe who have come to Britain taking advantage of the free movement of labour are likely to make a stronger net contribution to public finances. The Bank of England reported last year that overseas workers have played a significant role in boosting the pool of available labour and helping to ease labour shortages. Britain is experiencing direct and immediate benefits in increased trade, extra jobs and the benefits of migration from enlargementa process that the December 2005 agreement consolidates.
	Britain has also benefited, and will continue to do so, from structural and cohesion funding. Between 2000 and 2006, the UK received about 15 billion of those funds, going to projects that benefit constituencies in all parts of the country. That has contributed to the economic development of some of our poorest regions. Merseyside alone has received more than 300 million of European social fund investment, and Cornwall has also received a significant sumthe hon. Member for Falmouth and Camborne mentioned that. UK regions that still need funding will continue to receive itto answer a point made by the hon. Member for Stone, who has now left his placebut as areas such as Merseyside grow stronger it is right that the focus switches to the poorest EU regions, particularly the new member states.
	Before I conclude, may I turn to the budget review and the future of Europe? The figures I have been quoting this afternoon support the case that we need to be even more hard-headed in prioritising funding towards the future challenges that Europe faces collectively, if it is to secure value for money. As well as the benefits I have already outlined, we have secured a frank and honest process of challenge and review of the EU budget to ensure that Europe is helping to equip itself to face the challenges of the future. As the Prime Minister and the Foreign Secretary set out in the recent Global Europe pamphlet, the EU has spent too long focused on institutional questions. Europe needs to move on from that debate and focus on the issues that matter to its citizens: competitiveness; jobs; migration; the environment; and security. It needs to meet the challenges of globalisation and play its full part in the wider world, and to do that, its budget needs reform.
	Some change has been made, as I said to my hon. Friend the Member for Wolverhampton, South-West (Rob Marris), but he is correct in saying that too much expenditure40 per cent.still goes on the common agricultural policy, and more than 50 per cent. of economic investment spending continues to go to the richer member states. Without reform, the EU cannot meet its future challenges and we will not see the global Europe that we need. So it is clearly in Britain's interestand in Europe'sthat the budget is reformed. The fact that the agreement that this Bill implements provides for a review of the budget, including the CAP, is the third reason why the Bill will implement a good agreement for Britain.
	As part of the budget review, the Government will work with their partners to make the case for a reorientation of the budget towards areas such as innovation, tackling climate change, international development and migration. That does not mean any lessening of our commitment to budget disciplinefar from itand spending resources effectively will remain at the heart of our approach.
	The hon. Member for Shipley (Philip Davies) enticed me earlier into talking about the European Court of Auditors' report, and I told him plainly that much more progress must be made in this area. In addition to the measures that we have championed over recent years, such as the establishment of the European Anti-Fraud Office, former Commissioner Kinnock's work on Commission reform, the shift to activity-based budgeting and accruals accounting, and the Commission's 2006 action plan following the UK presidency's work, we will go further. We have made proposals for increased national parliamentary scrutiny of EU funds through the publication of an annual consolidated statement of EU expenditure, prepared to international accounting standards and audited by the National Audit Office.

Chris Bryant: rose

Andy Burnham: I shall give way to my hon. Friend [Interruption.]

Chris Bryant: I am grateful for that round of applause from Conservative Members. Surely the important point about the auditors' figures is that nearly all the problem areas involve member states' expenditure rather than the Commission's. We and the Commission have been trying to argue for some time, although Conservative Members have been opposed, for the Commission to have increased powers to investigate how that money is spent in member states. Is it not incumbent on those who argue against qualified majority voting sometimes to explain what the problems are?

Andy Burnham: My hon. Friend has tempted me on to matters that this House will debate in a few weeks' or a few months' time. He is correct in the substance of what he says. That contradiction is so often at the heart of what the Opposition call for. We have been leading the case for the reform of financial transparency and accountability in Europe, and we will continue to do so. We plan to present our consolidated statement in the spring of next year and, as I have said, it will be audited by the NAO. The European Court of Auditors pointed to such examples as being the way to improve standards of financial transparency across the European Union. I am pleased that we are playing a leading role in making that happen.

Philip Davies: rose

Andy Burnham: I shall give way, for the last time before I finish, to the hon. Gentleman.

Philip Davies: I am pleased that the Minister acknowledges that work needs to be done. Does he accept that reform is much more likely to take place if we were to withhold our payments until matters have been sorted out and that it is much less likely to happen if we keep paying more and more money and asking the EU whether it minds doing something about it?

Andy Burnham: My hon. Friend the Member for Wolverhampton, South-West made a good point before. He asked whether or not people should just come clean. The hon. Gentleman has not declared this, but he is a member of the Better off out group; I believe that six Tory MPs are involved. All his questions need to be understood in that context. I do not think that I could try your indulgence by quoting him at length, Madam Deputy Speaker, although I did promise a quote from him earlier. It would have gone along the lines of how pleased he was that the Leader of the Opposition was now letting him campaignhe is off the leashas a Back Bencher to make the case for being out of Europe. Is that correct? Does he remember giving such a quote to the BBC website?

Philip Davies: indicated assent.

Andy Burnham: He is nodding. If the leader of the Conservative party is allowing Members such as the hon. Gentleman to make the case that we are better off out, is it not time

Madam Deputy Speaker: Order. The Chief Secretary has made his point, so perhaps we could now proceed with the debate.

Andy Burnham: I shall now proceed to my conclusion, Madam Deputy Speaker[Hon. Members: Hooray!] Well, I have allowed many interventions.
	I shall recap the three reasons why hon. Members should give the Bill a Second Reading tonight. First, it secures a rising British rebate within a more disciplined overall budgetfact. Secondly, it serves our national economic interestmore jobs, more exportsby helping the countries of eastern Europe to prosper. Thirdly, it paves the way for a critical look at how we reshape the EU budget to prepare for the big challenge of the future that we face in common with our European partners. The EU has made Europe and Britain more secure and more prosperous. On this side of the House, we are pro-European, but we are not uncritical and we are hard-headed. We are prepared to stand up for Britain's national interest. We do not posture or grandstand. We will get the reform that Europe needs, but it will be within the context of making the case for engagement with the European Union.
	This is a good Bill for the British taxpayer, for the British economy and for Britain's future, and I commend it to the House.

Ian Davidson: On a point of order, Madam Deputy Speaker. Would it be in order for me to move a vote of thanks to the comrade Minister, on the basis that, while still partially deluded, he has been generous in taking interventions?

Madam Deputy Speaker: That is not a point of order for the Chair, although the Chief Secretary certainly was generous in taking interventions.

Philip Hammond: This is a very small Bill, with one operative clause, although after the Chief Secretary's speech I am grateful that it does not have 30 clauses. That one operative clause contains, however, the single biggest spending commitment in the whole of the Government's legislative programme. It is a 7.4 billion bill, addressed to the British taxpayer, and an hour and six minutes of obfuscation from the Chief Secretary has not changed that.
	This is a stealth Bill, sneaked in without a mention in the Queen's Speech and completely ignored in the Prime Minister's speech in the debate that followed. Far from being something of which the Government are proud, it is a Bill that dare not speak its name. The Prime Minister has done with this Bill exactly what he always does with bad news: he has tried to slip it in under the radar in the hope that nobody will notice it.
	It is in order to congratulate the Chief Secretary, who made a valiant attempt to defend the completely indefensible. He gave a fair impression of a man who has been living in a complete vacuum since 1999. He stood here and told us that the own resources decision that the Bill will implement is a great victory for Britain, despite the fact that his own Government told us for yearsuntil they gave way in December 2005that they would fight tooth and nail to avoid that. The Government are not proud of the Bill, and neither should they be. Incidentally, it is interesting to note that the Chancellor is not in his place to support the Chief Secretary.
	The agreement that the Bill implements is a bad deal for Britain, and the Chief Secretary knows it. We know it, too, because when the former Prime Minister signed away Britain's rebate, the current Prime Minister briefed every journalist he could find that it was a bad deal, that it was all Tony Blair's doing and that he would never have agreed to it. A Treasury official put it this way at the time:
	We have ended up giving away much more than we expected and with precious little to show for it in return.
	A senior aide to the then Chancellorno prizes for guessing whotold the press that the sell-out would inevitably lead to public spending cuts. No wonder the Government want to get this Bill out of the way at the very beginning of the Session with as little noise as possible. It is an embarrassment and reminds us again of some of this Government's serial failings, such as duplicity, in repeatedly breaking their promises on Europe; incompetence, in failing to obtain anything in return for our money at the negotiating table; and fiscal incontinence, in throwing away yet more hard-earned taxpayers' money for nothing in return.

Chris Bryant: Clearly, the hon. Gentleman does not like this deal, but, as he knows, in negotiating a different one he would have to persuade other countries to sign up to it. Can he name just one other country, or party, in Europe that would support his proposals? Secondly, if there is a Conservative Government, will they renege on the measure if it has already gone through Parliament?

Philip Hammond: It is not the kind of proposal that I would suggest; it is the kind of proposal that Tony Blair went to Brussels to suggestthat we negotiate a reduction in the British rebate in exchange for sustainable reform of the common agricultural policy, to achieve objectives for this Government and objectives appropriate for the British taxpayer.

Chris Bryant: But what would you do?

Philip Hammond: I shall address the hon. Gentleman's point later in my speech.

Hugh Bayley: Will the hon. Gentleman give way?

Philip Hammond: I do not want to fall into the same trap as the Chief Secretary and extend my remarks beyond an hour, so I will give way to the hon. Gentleman in a moment.
	The Chief Secretary said that giving away the rebate was the right thing to do. It was all so different back in 1999, when the then Prime Minister said that the rebate was non-negotiable. He maintained that position as late as June 2005, when he reiterated it to the House of Commons in ringing tones:
	The UK rebate will remain and we will not negotiate it away. Period.[ Official Report, 8 June 2005; Vol. 434, c. 1234.]
	His then Chancellor, now the Prime Minister, took the same view. When asked in an interview whether the rebate was non-negotiable, he replied simply, Yes.
	I remember the then Prime Minister's statement in the ChamberI was sitting at the end of the Opposition Front Benchand thinking that the commitment he had made was so clear and unequivocal that even he could not possibly wriggle out of it. I should, of course, have known better. Within two weeks, we had a West-style 180(o) clarification of those words, when he said that the rebate was
	an anomaly that has to go.
	Perhaps we should all have realised that he had been trying to say that in the first place. There was a further clarification on 29 June, when, attempting to defend his volte face, he said:
	Of course, if we get rid of the common agricultural policy and we change the reason why the rebate is there, the case for the rebate changes.[ Official Report, 29 June 2005; Vol. 435, c. 1293.]
	That is not exactly the rebate will remain and we will not negotiate it, but it is a perfectly respectable negotiating position and one that we made it clear we could support. Radical reform of the CAP in exchange for a corresponding reduction in the British rebate would provide a satisfactory outcome for the UK taxpayer and at the same time move the EU from the disastrous agricultural protectionism that damages consumers and developing economies alike, and which the Prime Minister described as a prerequisite for making poverty history.

Andy Burnham: I realise that I spoke for a long time, but if the hon. Gentleman believes that the deal gives away too mucheven though, as I said, Britain as a net contributor will be in rough parity with France and the middle-ranking wealthier nationswill he say how much the Conservative party would be prepared to pay to support economic development in eastern Europe? Anything? Between the amount the Bill implements and nothing? How much exactly would it be?

Philip Hammond: The right hon. Gentleman completely misses the point of the debate, which is the own resources decisionthe contributions of individual member states to the agreed disbursement budget. Nobody suggests that as a result of the Bill the amount disbursed under the EU budget will change, although if we chose not to support the Bill the composition of the contributions would change. I remind the right hon. Gentleman that under this proposal the UK will contribute an additional 19 billion net over the next seven years. If the rebate had not been given away we would still contribute an extra 12 billion over that period. There is, rightly and properly, an increased contribution to pay for the increase in the size of the Unionthe price of enlargement.
	I shall continue with my narrative, if I may. The Prime Minister went off with his team to Brussels with clear objectives: first, to cap the budget at 1 per cent. of European Union gross national income; secondly, to shift the focus of EU spending from agriculture, with the ultimate objective of scrapping the common agricultural policy; and, thirdly, to keep the British rebate unless and until that reform was complete. So how did they do? They failed on every single one. The budget that this lot signed up to added more than 25 billion of extra spending. The Prime Minister claimed after the event that that reflected the cost of enlargement, but without reform, Ireland, whose per capita GDP is 30 per cent. higher than the EU average, is getting more per head than Lithuania, Slovakia or Poland. France will remain the EU's biggest recipient and the UK the lowest net recipient per capita.

Hugh Bayley: The hon. Gentleman feels that the Government did not drive a hard enough bargain, but let us talk real politics, not fantasy politics. What tactics does his party have that he believes would have achieved agreements from some other EU member states that were not achieved by this Government? I and my party have talked to colleagues from our sister parties inI am talking personally nowSpain, France, Germany and Greece to explain why we want changes to the common agricultural policy and other things. What sister parties could the hon. Gentleman speak to? Why does he think that the Conservative party could drive a better bargain than our Labour Government?

Philip Hammond: If the hon. Gentleman listens, he will find that the burden of my argument is that this Government have failed in their principal duty to protect the interests of the British taxpayer, not as defined by me or by my right hon. and hon. Friends, but as defined by the former Prime Minister and by the current Prime Minister in the December 2005 negotiation.

Hugh Bayley: What would the hon. Gentleman's party

Madam Deputy Speaker: Order. Is the hon. Member for Runnymede and Weybridge (Mr. Hammond) accepting a second intervention?

Philip Hammond: indicated assent.

Hugh Bayley: What would the hon. Gentleman's party advocate to achieve a better agreement?

Hon. Members: Veto.

Philip Hammond: The hon. Gentleman has heard my hon. Friends' answer. The decision required unanimity so there was no need to concede the point without substantive reform of the common agricultural policy, which the then Prime Minister promised the House he would deliver.

Ian Davidson: Will the hon. Gentleman give way?

Philip Hammond: I shall in a moment.
	Far from scrapping the common agricultural policy, the Government agreed to an increase in its budget in every year to the 2013 horizon. In fact, it emerged later that, despite the rhetoric, the UK Government did not table specific proposals for reform of the common agricultural policy during the negotiations. What they did achieve was a review, which, surreally, will be conducted during the French presidency of the Union, so I advise my right hon. and hon. Friends not to hold their breath. We can only speculate on the hilarity that will have been occasioned on the Quai d'Orsay by this display of British negotiating prowess.
	The UK team came back with no 1 per cent. cap on the budget and no reform, let alone scrapping, of the CAP. In accordance with the Prime Minister's formula, that meant no surrender of the British rebate, right? I am afraid that that was wrong. They returned not only empty-handed but with a pledge to send more bounty, in the form of a 7.4 billion reduction over the years 2008 to 2013 in the rebate that would have been payable to the United Kingdom were the own resources decision not to be implemented in UK legislation.

Quentin Davies: Will the hon. Gentleman give way?

Philip Hammond: I shall in a moment.
	It was a truly humiliating defeat, for which British taxpayers will have to pay, not only in the next six years but ever after, because the new, lower rebate is now the basis of future budget negotiation.

Ian Davidson: rose

Quentin Davies: rose

Philip Hammond: I give way to the hon. Member for Glasgow, South-West (Mr. Davidson).

Ian Davidson: Does the hon. Gentleman agree that it is entirely inappropriate and unilluminating for Government Members to try to disguise the fact that we got a bad deal simply by attacking the Tories for having no policies and being completely useless?

Philip Hammond: I have to congratulate the hon. Gentleman on his elegant question. If I were in the Chief Secretary's position, I would do what he has done today: throw up lots of smoke and hope that everybody goes to sleep by the end of the debate.

Quentin Davies: Talking of throwing up smoke, has the hon. Gentleman not noticed the two most salient aspects of the agreement? One is that the weighting of agriculture in the EU budgetthat is to say, the proportion of agriculture to total spendingis falling, and the other is that the French contribution's rate of increase is higher than ours.

Philip Hammond: I hesitate to be cruel to the hon. Gentleman, but I say to him what the Chief Secretary said to me earlier: read the papers before you come into the Chamber. The agreement has nothing to do with agricultural spend. It has to do with the own resources decisionthe contribution made by individual members. That is what the Bill will implement.

Quentin Davies: The hon. Gentleman criticises me for not doing my homework, but that is far from the case. Does he accept that the two matters are obviously linked? It is extremely important that we consider both sides of the bargain. He is continuing to evade the point. He does not want to recognise an enormously important achievementthat the weighting of agriculture in total EU spending has been reduced as part of the package. Why does he not recognise the facts when they happen to be in favour of the Government rather than of his own party?

Philip Hammond: The hon. Gentleman refers to the link or otherwise between the spending decision and the own resources decision. I shall come to that point in a moment.
	To return to the result from Brussels, the limit on the cost to the UK of the reduced rebate will end in 2013. Failure to reach agreement on a budget for the period after 2013 would have a devastating effect on the UK contribution, because the rebate reduction would become uncapped. We would have no effective veto, and thus no negotiating power, during negotiations on the EU budget for the period from 2013and our partners in Europe would know it.
	There is one further twist to the tale. The Prime Minister, when he was Chancellor of the Exchequer, put it about that he was against the deal. When it was announced, the Treasury pointedly refused to endorse it and denied all responsibility, because it was worried that the deal would force future spending cuts. According to the Treasury briefing, the current Prime Minister was quietly fuming. What did he do? This April, it became known that having failed to claw back some of the rebate through negotiation, he too had caved in and agreed to accept the original dealthe deal that he had previously condemned. So much for his powers of persuasion on the international stage.
	That is the sorry tale behind the Bill, although, of course, that could never be discerned from reading it. We, the Parliament of the United Kingdom, whose responsibility is to our electorate and our UK taxpayers, are invited to give the Bill a Second Reading, thus giving effect to what was donein our name, but in complete contradiction of everything promised to us in this Houseat Brussels in December 2005. If we do so, by 2010 the UK taxpayer will be footing the bill for an extra 1.9 billion a yeara sum roughly equivalent, fittingly enough, to the total Foreign Office budgetas a result of the sell-out on the rebate. That is in addition to the increase in the UK contribution to the underlying budget1.5 billion a year on average for the period 2007 to 2013to deal with the cost of enlargement. Taking into account the loss of the UK rebate, which will increase our share of total EU costs, and the growth in the budget during that period, the UK's net contribution will more than double, from 2.8 billion a year on average under the previous financial perspective to an estimated 7.3 billion in 2013.

John Baron: May I tempt my hon. Friend to speculate about why we caved in on the rebate? Given that it was non-negotiable and that there has been no meaningful reform of the common agricultural policy, does he think that there is a connection between our sudden cave-in and the recent statement by the French that they thought Tony Blair would make an excellent President of the EU?

Philip Hammond: That is an extraordinarily interesting piece of speculation better made from the Back Benches than from the Dispatch Box. I leave my right hon. and hon. Friends to draw their own conclusions.
	The choice before the House when the Question is put this evening will be whether to endorse or reject the sell-out of the British rebate. It is not about the overall EU budget or the financing of enlargement, which the Government have tried to spin; it is about the division of the total budget cost into individual contributions. It is about whether we are prepared to throw away the hard-won victory of 1984.

Andy Burnham: The hon. Gentleman keeps making that point, but he is completely confused. The 2007 to 2013 budget and the own resources decision that determines how that budget will be financed are inseparable; they are part of a package. If he reads the own resources decision, he will see that it sets out a schedule for how the payments will be calculated and indeed how the British rebate is to be calculated. How on earth can he continue to make the point that the two things are not part of the same issue?

Philip Hammond: The calculation of the amended rebate is a purely mechanical process to give effect to the political decision made in Brussels. If the Chief Secretary looks at his own Bill and the decision that it implementshe looks terribly perplexedhe will see quite clearly that the decision deals with the calculation of own resources, not the overall financial perspective and the total budget.
	The question that we must decide tonight is whether we are prepared to throw away the hard-won victory of 1984, which recognised the budget system's unfairness to Britain and enshrined the rebate that we are now being asked to sacrificethe rebate, I remind the Chief Secretary, that the former Prime Minister said could not be negotiated unless and until the CAP was scrapped or radically reformed.

Andy Burnham: The hon. Gentleman is straightforwardly wrong. I have the own resources decision here. Clearly, he has not read it, but article 4 sets out the precise terms by which the UK rebate will be calculated between 2007 and 2013. That is the framework by which the EU budget will be determined in the next financial perspective.  [Interruption.] It is part of the package. The two things sit together.

Philip Hammond: I advise the Chief Secretary to stop digging. He is right that the own resources decision sets out the mechanism by which the British rebate adjustment will be calculatedof course it doesbut it does not set out the EU budget, which is what he has been spouting on about for most of the debate.
	Let me come to the critical point. If we decline to give the Bill a Second Reading, what will happen? Will the roof fall in? Will the sun not rise in the east tomorrow morning? Nothing will happen. Lifeeven life in the EUwill go on exactly as before. The existing own resources decision will continue in force, indefinitely if necessary. The total expenditure budget will not be affected. The only difference will be that member states' contributions will continue to be assessed on the same basis as they were last year and the year before. The UK will remain the EU's second largest net contributor, but we will have 7.4 billion more to spend on British priorities; perhaps we could use it to reverse some of the Government's most recent round of stealth taxes or reduce the 143 billion that the Chancellor plans to borrow in the next five years.

Julia Goldsworthy: Is the hon. Gentleman saying that he would be happy for the UK to be a net recipient, benefiting from additional contributions from eastern Europe?

Philip Hammond: No. As I said to the Chief Secretary, the UK's net contribution will rightly increase substantially, without the change proposed in the Bill, to finance enlargement. The Chief Secretary is trying to have his cake and eat it. He wants to give away our rebate on top of that increase, which we will pay anyway as the EU budget increases.

Andy Burnham: It is right that our contribution will increase to pay for EU enlargement in eastern Europe. Our contribution is calculated by taking away the value of expenditure and the rebate from the overall gross contribution. The hon. Gentleman misunderstands the situation. If he agrees that it is right that our contribution should increase, the net contribution should be calculated by reference to the rebate itself.

Philip Hammond: I know that the Treasury operates only a static model. The Chief Secretary would be right if everything else were static, but the budget is increasing. If the Bill is passed tonight, as he knows, our contribution will increase by an element that reflects the surrendered rebate and by another element that reflects the underlying increase in our contribution to the EU budget. If we do not give away the rebate, the UK contribution to the EU budget will still increase.
	I know that I am damning the Chief Secretary with faint praise, but even he could make a better fist of spending 7.4 billion of British taxpayers' money than the EU. Last week, the European Court of Auditors refused to sign off the EU accounts for the 13th year in a row. The accounts are riddled with material errors and irregularitiesfor example, the irregularity that receipts are still not collected for MEPs' expenses, and the material error by which money earmarked for agriculture is spent on golf clubs. That is to say nothing of the 3.8 billion a year that the EU spends on propagandapublic relations staff, pamphlets, teaching aids, school trips and cartoons. There is the originally named Captain Euro, whose mission is apparently to uphold the EU's valuesperhaps he could find time to fight fraud and waste as a sideline.
	At a time when many priority areas of public spending are under intense pressure in the UK, how can this Government contemplate giving away 7.4 billion of British taxpayers' money in exchange for absolutely nothing? That money would pay for 45,000 nurses, 37,000 teachers, 42,000 prison places or, if the Chief Secretary prefers this currency, 1.2 million hip replacements. It would also pay for much-needed equipment for our front-line troops in Afghanistan and Iraq.
	We are used to this Government's casual attitude to public money: 5.7 billion was wasted on tax credit overpayments; 3 billion was spent on nine NHS reorganisations in nine years; and 141 million was wasted on an abandoned Department for Work and Pensions IT programme. We are used to tough rhetoric on Europe followed by craven surrender, and we are used to broken promises: there were broken promises on the referendum; a promise has now been broken on the rebate; and no doubt promises will be broken on the red lines. The Bill is so objectionable, because it embodies all those failures of government in one measure.
	We were promised that the rebate would be non-negotiable, yet it was surrendered without a fight. The Government talked tough about how they would force the scrapping or at least the radical reform of the CAP, but the CAP will remain untouched. At a time when our public services are feeling the squeeze, when our troops in the front line are short of equipment and when our schools are falling down the world league table, this Government propose casually to chuck away 7.4 billion of our money. By giving away our rebate, which has been worth 54 billion since it was negotiated in 1984, without securing anything in return, this Government have manifestly failed in their paramount duty to protect Britain's interests.
	We have a chance to salvage the situation. By rejecting this Bill tonight, Parliament has the opportunity to rectify the damage caused by the incompetence and duplicity of this Labour Government, to stand up for the interests of Britain and British taxpayers against an Executive who have broken their promises and betrayed the people's trust, and to send a clear message that Britain's hard-won rebate is not for giving away. I urge hon. Members to seize the chance this evening to send the Government back to the negotiating table in 2008, in parallel with the promised budget review, and to enter into a good-faith discussion about the rebate, the budget and the future of the CAP on the clear basis that all three are linked and that there will be no change to the British rebate formula unless there is long-term, sustainable reform of the CAP. This is our last chance. If the Bill is passed, Britain's rebate, and with it the principal lever to secure sustainable reform of the CAP, will be gone. I urge hon. Members to deny the Bill a Second Reading and to keep the cause of EU reform alive.

Denis MacShane: EU finance is horrendously complicated, and I wish the Chief Secretary and the hon. Member for Runnymede and Weybridge (Mr. Hammond), who spoke with considerable passion and eloquence, luck as they grapple with that problem.
	EU finance is to the 21st century what the Schleswig-Holstein question was to the 19th century. As a historian, Mr. Deputy Speaker, you will remember the Schleswig-Holstein question. Lord Palmerston said, Only three people in the country understand the Schleswig-Holstein question. One is dead; one went mad; and I'm trying to forget.

Mr. Deputy Speaker: Order. If there are only three and I am one of them, I hope that the right hon. Gentleman will clarify the situation.

Denis MacShane: I was referring to your knowledge of parliamentary history, Mr. Deputy Speaker, and not to your expertise on the frontier regions between Denmark and Germany.

Kelvin Hopkins: Will my right hon. Friend give way?

Denis MacShane: The Chief Secretary was extraordinarily generous in giving way, and as a result his speech lasted for well over an hour, which was not his fault because most of the time was taken up by interventions. The shadow Chief Secretary was also generous in giving way. I want to make my pointsbut I will give way to my hon. Friend.

Kelvin Hopkins: My right hon. Friend began his speech by correctly stating that the system of European finance is complex. I agree with him, and have suggested on many occasions that we should replace it with a simple system of fiscal transfers from rich nations to poor nations and get rid of all the complication in between. Is that not a good idea?

Denis MacShane: I will come on to that point, because part of this debate is about a transfer from a very rich nationour ownto some very poor nations. I am disappointed by the mean-minded approach that we have heard from Opposition Members so far on that matter.
	We need to go back into parliamentary history, although not as far as Lord Palmerston. When Baroness Thatcher brought back the rebate in 1984, one MP asked:
	Does she agree that, compared with the target that she set four and a half years ago, yesterday's settlement is a humiliating failure for Britain, in which the only flag that she raised for Britain was not the Union Jack but the white flag of surrender? If that is not so, will she confirm that despite all the sabre-rattling about rebates, Britain's net contributions in the past five years of Tory Government have been 100 million per year higher in real terms than they were under the Labour Government?[ Official Report, 27 June 1984; Vol. 62, c. 1005.]
	That was my right hon. Friend the Member for Blackburn (Mr. Straw), now the Secretary of State for Justice, who is a distinguished friend of all Labour Members and a stunningly successful Minister.
	The then Prime Minister was also taken on by the then leader of the Labour party, who is now Lord Kinnock. In the same debate, he said:
	the right hon. Lady agreed to a 40 per cent. increase in VAT contributions to the Common Market. Will she confirm that the Government's public expenditure plans make no provision for that addition beginning from 1986? Therefore, where will that extra 40 per cent. come from?[ Official Report, 27 June 1984; Vol. 62, c. 995.]
	I think that Conservative Front Benchers will do me the courtesy of saying that there is a little similarity between the points that they have made and the points made in that debate 23 years ago.

Jim Cunningham: My right hon. Friend mentioned Baroness Thatcher; it is worth mentioning that during that period she was going to sort out the common agricultural policy, but got bought off by the rebate. That is what actually happened.

Denis MacShane: At the time of Mrs. Thatcher's premiership, spending on the CAP was significantly higherabout 80 per cent. higherthan it is today. It has come down consistently in real and percentage terms, and it is still going down. One can put nominal figures on that: it has gone up fromwhatever you like40 billion to 43 billion, but that has to be seen in the context of the share of member states' GDP that goes towards EU financing as a whole. Does the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) want to intervene?

Daniel Kawczynski: indicated dissent.

Denis MacShane: He will come in later, I am sure.
	During the debate that I mentioned, senior members of my partyits leader and one of its brightest young starswere roaring with Europhobic and mathematically illiterate nonsense at the good deal that the then Prime Minister had brought back. Later in the debate, she was challenged about why she was not spending the money on British prioritiesa point that was also made today by the shadow Chief Secretary to the Treasury. Lady Thatcher said, Are you saying that we should not help the poor people of Portugal? She stood there and told the Labour party to be generous to poor countries in Europe. In effect, she agreed to a significant increase in the overall budgetto 1.4 per cent. of European GDP, an increase of about 40 per cent. The EU budget is now lower as a share of European GDP. Again, I salute Margaret Thatcher; there are things in Europe that can be done better collectively than through the mechanisms of 27 national states. She was right then, and this Government are right now. I invite Conservative Members and Front Benchers to become a little more Thatcherite; it will not do them any damage at all.
	The hon. Member for Shipley (Philip Davies) has left his place; he wants us to quit the European Union, and some other hon. Members are joining him. The hon. Member for Stone (Mr. Cash) has quit his place, probably to prepare for the longer debates that will take place when the ratification treaty comes back to this House. We are left with the cream and core of the intelligent Conservative party, who understand the figures, and I am sure will make wise contributions.
	So far, we have seen from its Members' interventions the Conservative party that we know and love: right-wing, reactionary, righteous, rabid and utterly contemptuous of the notion that Britain should lend any help to countries and people to whom we owe a debt of honourand not only that. Playing his usual surrogate accountant's role, the Chief Secretary went on and on about how much money we make from Poland and other such countries. That is true, by the way, but Britain is achieving a nobler ambition through this Bill and its proposals on EU financingto discharge a debt of honour, which we owe particularly to Poland.
	The hon. Member for Shrewsbury and Atcham and I share a concern and a family connection with Poland; he is welcome to make an intervention later. In the past century or so, British history has not been generous vis--vis Poland. Tory appeasement betrayed Poland to the Russians and the Nazis in 1939, and at Yalta Churchill allowed the division of Europe, and allowed the communists to take control of Poland. In the 1970s a Labour Government even objected to the raising in Gunnersbury of a memorial statue to the victims of the NKVD executions in Katyn in 1940.
	As a Government, we have discharged some of that debt by leading the encouragement to Poland to join the EU. To give it credit, in 2004 the Conservative party did not join the rabid tabloid press and its campaign to stop Poles from coming to work here. There were some remarks, but the party did not vote against the Bill in question. I think that the hon. Member for Shrewsbury and Atcham was the shadow spokesman on Europe at the time; we worked together on the issues.
	When I was Minister for Europe, something upset me considerably as I went round the eastern European countries and spoke to people. I was asked why theythe people of Poland, Hungary and the Czech Republicwere signing cheques, for 50 million or 74 million, directly to Her Majesty's Treasury to pay for the British rebate. I could talk about France and the common agricultural policy, but it was not cutting much mustard; such countries were signing cheques to HMT as part of the rebate.
	That is how the rebate works; it is not an aggregate sum of money, some of which we do not pay, although that is what people think; it is paid directly by national Governments. I did not have an answer for those countries. After the stunning success of Labour Governments who, after the disastrous economic policies of the preceding Government, have seen national wealth more than double in the past 10 years, how could we, one of the richest nationsnot only in Europe, but in the worldsay to eastern European Governments, Your poor people have to pay money to our rich nation?

Daniel Kawczynski: I agree that Britain has helped Poland and other eastern European countries tremendously. The right hon. Gentleman mentioned Margaret Thatcher. In 1990 she was instrumental, in the Paris club of lending nations, in getting rid of Poland's debts. However, the way to help countries such as Poland in future is through increased trade and helping British companies trade liberally with Poland, not constantly giving it handouts, as the Bill purports to do.

Denis MacShane: I do not want to make this a Polish-Polish debate, but I ask the hon. Gentleman to reflect a little on what he has said. In 1982, the communist secret police in Poland put me in prison for taking money to the underground Solidarity union. The following year, Britain imposed swingeing visa controls against allowing Poles to come into the United Kingdom. The year after that, Mrs. Thatcher was talking about that faded communist hack Gorbachev as a man with whom she could do business. I accept that once the Poles had won their freedom, Mrs. Thatcher came round to accepting that that was a good thing. However, I wish that she had been a bit stronger in her support when I was in prison, and when the Poles needed to come to this country a bit more easily.
	Thanks to the joint work of the Labour and Conservative parties in facing down the anti-eastern-European tabloid press, Poles have been able to come here. However, the tabloids are once again screaming against the eastern European ladies and gentlemen working here.
	Yes, I accept that Britain will now pay a bit more. I have no problem with that, because we have had a good deal from the rebate in the past 24 years. Despite what the shadow Chief Secretary said, we are not, in per capita terms, the largest or second largest contributor to the EU budget. Page 32 of the very good Library report shows that we paid 68 euros per head last year. The Netherlands pays four times as much, at 241 euros per head; Denmark pays twice as much at 127 euros per head; Sweden pays 124 euros per head, while Germany pays 100 euros per head. France and Austria pay 50 and 40 euros per head respectively. Those countries, too, are pretty fed up with the assumption that Britain does not have to pay its fair share.

William Cash: I should like to take this opportunity with regard to a pointnot exactly an allegationthat I made earlier. I am grateful to the right hon. Member for Rotherham (Mr. MacShane) for correcting himself to a certain extent just now. He specifically mentioned France, which brought me to my feet earlier. Per head, we pay considerably more than France and Italy, but that is without prejudice to the fact that I had said that we contributed much more than we do. I wanted to correct that for the record.

Denis MacShane: The Francophobia that always infects these debates is jolly good fun, but there are 25 other member states apart from France and the United Kingdom, in the European Union, and the figures vary. I fully accept that there are grotesque anomalies such as Luxembourg. I am getting into some gruesome detail which I would not want to inflict on the House, but the plain fact is that the Netherlandsour trusty old Protestant ally for 300 yearspays four times, pro rata, what we pay. Why on earth should the Dutch always have to pay part of the British bill? That is how they will see itditto the Swedes and the Germans. The Germans have spent 4 per cent. of their gross domestic product, year on year, on East Germany following unification. That is twice to two and a half times what the United States put into western Europe under the Marshall plan. The Germans, with a much bigger problem to solve than we have ever had to facethe incorporation of a bankrupt third-world country, the German Democratic Republic, into the western German Federal Republichave made huge personal sacrifices as a nation, yet still pay proportionately far more, 35 per cent. more, on last year's figures, than we do. The figures against us are much worse, in terms of Germany, the Netherlands and some of the Nordic countries, during the recent past.
	If we get into arguments that simply state that whatever happens we must pay less than everybody else, the European Union might as well pack up shop. I fully accept the shadow Chief Secretary's point about the common agricultural policy. I do not deny that for one second. The figure is coming down as a share. Let me read moreI might even be tempted to do it in French this timefrom today's  Le Figaro, which says in the course of a long article: France now accepts that there will have to be a reduction in European Union agricultural expenditure. The debate among the 27 member states will start under the French presidency in the second half of next year. That is when the next pluriannual budget, 2013-2020, will be adopted. I would love the Conservatives to address this issue, as well as my own Government, because we are not good enough at explaining to partners with sufficient force and vigour that the way in which the European Union budget is constructed is not necessarily the best way for Europeans.
	The biggest defenders of the CAP are not the French but the Irish. Irelandan English-speaking country with a centre-right conservative party, Fianna Fil, in poweris passionate in defending the CAP. I would invite the Conservatives to talk to Fianna Fil; I cannot do it, because it is not in the same political family as the Labour party. I would even ask my right hon. and hon. Friends on the Front Bench to create a special EU CAP reform persuasion budget that could be given to the Conservatives, so that they could go to talk to all the ruling centre-right parties in Germany, Poland, the Nordic countries, Netherlands, and Francebut, as we know, the Conservatives want to effect a total rupture with the EU's other centre-right ruling parties. The UK is extremely badly served by a neo-isolationist attitude whereby they will not go and network politically for the common goals that most people in Britain, across parties, would support.

Kelvin Hopkins: My right hon. Friend has made several references to Ireland. If I were Irish, I would be very enthusiastic about the CAP and the structural fund policies, because the Irish are massive net beneficiaries from the budget. At its peak, it went as high as 5 per cent. of GDP, which in British terms would be 60 billion. A net inward transfer of funds from the EU totalling 60 billion might make us rather more enthusiastic.

Denis MacShane: I am terribly sorry, but page 34 of the Library report shows that in 2006 Ireland received 475 million of structural fund expenditure, while Britain received 3,021 million.  [ Interruption. ] My hon. Friend is right in per head terms; I cannot disagree with that. However, I am making a different point: if we want Ireland, France, Germany and other countries to change, we must engage with them. Believe it or not, this debate is not being listened to right now by the good people of Ireland as they settle down to their boiled ham and cabbage and a good pint of Guinness.

Kelvin Hopkins: I return to my previous point. If the system of contributions and receipts from the EU was proportionate to the relative degree of prosperity in the different nations, everyone would be happy.

Denis MacShane: My hon. Friend is talking through his hat. Ireland was so poor when it joined in 1973 that the amount of net transfers from the UK economy would have been absolutely enormous. The idea that each country goes round with a begging hat saying, I'm poor, please give me some money, simply will not work. I respect my hon. Friendalthough he does not like the EU and the way it works, he has always taken a consistent, cheerful and friendly position on itbut we have to work with what we have, and if we want to change it, we have to engage, network and discuss. That is what the Conservatives completely and resolutely refuse to do.

Daniel Kawczynski: The right hon. Gentleman has been talking about Ireland. I must tell himwe get on quite well with one another, so I hope that he will take this on boardthat the Irish Government have just spent 300 million of taxpayers' money on propping up the Irish dairy industry. I am chairman of the all-party group on dairy farmers. How can our dairy farmers in the west of England and Wales compete when the Irish are so flagrantly contravening the spirit of the common agricultural policy?

Denis MacShane: I wonder whether that is a wise intervention on the afternoon when we have learned how much money we are giving to Northern Rock. If the Irish subsidy, subvention or support is against EU state aid provisions, let it be taken to the European Court of Justice. To be fair, my right hon. Friend the Chancellor of the Exchequer made it clear that any aid that the British Government choose to give to protect the 1.5 million borrowers and savers in Northern Rock must be within EU rules.
	Hon. Members have spoken as if Britain were a net contributor to the EU in all areas and we got nothing back in return. In fact, last year's structural fund expenditure figures show that the UK gets a third more than France, 20 per cent. more than Belgium and nearly twice as much as the Netherlands. We get more than Slovenia, one of the accession member states, andthe hon. Member for Shrewsbury and Atcham might want to listen to this pointonly 1 per head less than Poland. The world's fourth largest economy gets from the EU only 1 per head less in structural funds than Poland, which, despite its enormous economic progress, is still a not very rich EU country.
	I want reform of the CAP. What we are debating was, in effect, set in stone in 2002 with the agreement between the then French President, Jacques Chirac, and the then German Chancellor, Gerhard Schrder, to maintain CAP expenditure at a fixed amount, not as a percentage amount. That was in the context of the Iraq conflict and, frankly, a deep worsening of relations and divisions within the EU. If we want to achieve desired British goals of getting some reduction as regards the CAP, we will have to look at linking up, making networks, making the argument and going out to persuade people. These decisions are not taken in some closed caballing session in Brussels. They are taken by parliamentarians like ourselves in Paris, Dublin, Germany and Rome, and we need to talk and network far more with them ahead of decisions being taken.
	We might also decide that the common agricultural policy could focus its attention on the poorer farmers in Britainthe hill farmers, the sheep farmers and those with a very small incomeand increase the support that goes to rural development. But what did I read yesterday in  The Observer? It was suggested that the richest recipients of CAP aid, such as the Duke of Marlborough and all the Tory-supporting ex-aristocracy, are receiving hundreds of thousands of euros. The British Government, who like a duke when they see one, will try to defend outrageous payments to the richest cereal and agro-industrial companies in Europe, as well as to some very rich individuals in our country. We have to consider motes and beams before we lecture other countries on those issues.
	My hon. Friend the Member for Luton, North (Kelvin Hopkins) mentioned Ireland, which has become very rich since it joined the EU. I welcome that. I went on holiday to Ireland as a small boy, and it was a very poor country then. I saw cattle driven through the streets of rather big towns. In the 1950s, almost every second Irish male had to emigrate to find a job.

William Cash: I would like to draw to the right hon. Gentleman's attention an extremely interesting book by Roy Foster called Luck and the Irish. I heard Roy Foster on Today or the Andrew Marr programme the other day, explaining that although there is no doubt that the EU contributed to the manner in which the Irish have become far more wealthy, which I greatly enthuse about, it was to do with the American money that was invested and the cutting of tax rates.

Angus MacNeil: Independence: that's the word.

Denis MacShane: I do not know whether the hon. Gentleman really thinks that the Ireland of the 1920s, 30s and 40s, or even the 1950s, was a rich and successful country. The kind of ultra-nationalistic independence that he believes in usually bankrupts and impoverishes a country very quickly.

Angus MacNeil: Will the right hon. Gentleman give way?

Denis MacShane: I was in Edinburgh on Saturday, and I wept. I did not drink Italian coffee or eat spaghetti for a whole 24 hours. However, the Scots must have their point.

Angus MacNeil: I am grateful to the right hon. Gentleman, who has such a fine Scottish surname, or perhaps it is Irish. Does he think that Ireland would be as successful today if it were not independent?

Denis MacShane: Ireland is successful today because it plays a full role in the European Union. Were Scotland to quit the Union, I would be interested to see the price it would have to pay to enter the EU, because it would be a tricky renegotiation. However, we are veering way off the subject.
	What counts is that the Irish used the moneys that they got from the EU better than almost any other country. They were combined with enormous investment in education and a sensible taxation policya point that I concede to the hon. Member for Stone. None the less, are we saying that after 1973, Britain should not, to a lesser degree than Germany or the Netherlands, have made significant fiscal transfers that have allowed Ireland as a nation during the past 33 years to become richer and happier than it ever was when it was an independent state before it joined the EU, or when under English control? I do not think so. It must have been in our interests to do so. It is why Ireland today is a country of immigration, not emigration. Immigration brings its own problems, as we know, but it is far better to be a country that is so successful it needs to attract workers to do jobs that nationals are not prepared to do.
	That ought to be our ambition for the rest of Europe. Many hon. Members will remember travelling to Spain, southern Italy or even bits of France not so long ago and being able to see rural and social poverty. It was quaint, and it was nice for the British ex-pats who could buy houses and drinks that did not cost very much, but now it is far better that Italians and Spaniards can, in contrast to their position in the 1950s and 1960s, stay in their own countries, and that those countries are rich enough to attract people to work in them. That is my ambition for Poland and the Baltic states. In order to achieve that ambition, some generosity on our part, and some lessening of the assumption that it is only the Germans, Dutch and Swedes that should pay, would be welcome.
	We can see the success that membership of the European Union brings to all countries. I have explained why it makes us all more wealthy, and I hope that the figures are not in question.

Angus MacNeil: Will the right hon. Gentleman give way?

Denis MacShane: No, I will not, if the hon. Gentleman does not mind.
	In 1960, about 14.6 per cent. of GDP was in exports to what are now EU member states. That figure is now closer to 60 per cent. Britain's wealth has doubled in the past 10 years, principally on account of our membership of the EU.

Austin Mitchell: rose

Angus MacNeil: rose

Denis MacShane: I love my hon. Friend the Member for Great Grimsby (Mr. Mitchell), but he has not been in his place since the beginning of the debate, and neither has the hon. Member for Na h-Eileanan an Iar (Mr. MacNeil), so I shall not give way. I will do so to those who have been here since the start of the debate.
	As well as making us more wealthy, it transpires that membership of the EU makes us more healthy. A new book that has just become available in the Library, in the new arrivals section, contains a marvellous statistic showing that between 1965 and 2004, the life expectancy of the British male increased by 13 years. In the United States over the same period it increased by only eight years; in France, it increased by 10 years and in Norway by just seven years. Membership of the European Union is allowing us to live longer; I would have thought that all hon. Members would welcome that.
	This modest Bill will allow financing of the European Union that has been negotiated, agreed and signed, and on which our word has been pledged. The shadow Chief Secretary to the Treasury is quite right to say that we can veto it and reject it, but he would have a hard time explaining to the Poles, Hungarians, Czechs and other eastern Europeans who are the principal beneficiaries why we should continue the current practice, which will come to an end once the Bill becomes law, of their sending large cheques to Her Majesty's Treasury. It is not worthy or honourable. The Conservative party is not anti-Polish or anti-European, but it seems to be absolutely locked into a philosophy of rejecting anything that helps the EU to grow.
	This time last week, the shadow Foreign Secretary, the right hon. Member for Richmond, Yorks (Mr. Hague), made endless appeals in a fine and effective speech for more European Union action. He said that EU Foreign Ministers had wasted opportunities and that they ought to do more on Iraq. I agree with him. On Burma, he says that the EU should tighten
	targeted sanctions against the military regime.[ Official Report, 12 November 2007; Vol. 467, c. 419.]
	I cannot disagree with him. He also said that EU Ministers need to show collective strength over Zimbabwe. I agree with him, but if he wants those desired goals to be achieved, there is a problem. It is not possible to demand more action from partners in EuropeI might add the case of Afghanistan or one or two other placesat the Dispatch Box while allowing members of one's party to campaign openly for withdrawal from the EU, or while writing articles and making the bulk of one's speeches utterly contemptuous of our partners. When the Leader of the Opposition talks about one-legged Lithuanians, the Opposition have a problem. When members of the Public Accounts Committee say, We're going to have to get toughthese guys coming in to talk to us are foreigners, we see the subconscious xenophobia deep at the heart of the Conservative party.

Charles Walker: You are a disgraceful man.

Denis MacShane: Does the hon. Gentleman wish to intervene?

Mr. Deputy Speaker: Order. The right hon. Gentleman really must bring his remarks closer to what he himself admits is a modest Bill. I have allowed him a fair degree of tolerance, but I think that he has been somewhat extravagant in dealing with a modest measure.

Denis MacShane: Any rebuke from you is always well merited, Mr. Deputy Speaker. I just think that we should help one-legged Lithuanians, and the Bill will do that. If Conservative Members find it difficult to understand just how offensive some of their anti-European bile is, that is a problem for them.
	To conclude, the Bill gives a legal mechanism to discharge a debt of honour to many friends in eastern Europe. We shall not be paying as much per capita as some other countries. France and to a lesser extent Italy will significantly increase their contributions under the new regime. Were this debate taking place in the French National Assembly, many deputies would be arguing that the Brits were again getting off scot-free and that the French were paying a massive increase in the bills for Europe [ Interruption. ] The hon. Member for Na h-Eileanan an Iar, speaking for the Scots nats, seems again to be joining up with the rabid anti-Europeans slightly to his right, in arguing [ Interruption. ] The hon. Member for Broxbourne (Mr. Walker) keeps making remarks from a sedentary position. He is entitled to do that, but if he wants

Charles Walker: rose

Denis MacShane: Oh good!

Charles Walker: Does the right hon. Gentleman not recognise that it is this type of speech that gives debates about Europe such a bad name? He has spoken for 37 minutes, two minutes of which has been worth listening to and 35 minutes of which has been utter drivel. Please can he spare us any more of this torture?

Denis MacShane: After 13 years I am torturing a Conservative MP. There we arehappiness is mine. When the hon. Gentleman has been here a bit longer, he will realise how utterly focused, short, relevant and to the point my speech has been.
	It is time to return to the debate of 1984, when Margaret Thatcher brought back a similar deal and was bitterly attacked by the then Opposition, who were gripped by a paranoid Euroscepticism of bile and hostility to the notion of being generous to poorer nations in Europe, and stayed in opposition for another 13 years. I commend to the House the Opposition's opposition to the Bill.

Julia Goldsworthy: It is a great pleasure to follow the right hon. Member for Rotherham (Mr. MacShane). He said that we would all live longer thanks to the European Union. It was a great pleasure to spend some of those extra minutes listening to him. I am sure that they did not feel wasted.
	The right hon. Gentleman made two important points, somewhere in his speech. One was that we should remember that it is not as if we do not get anything back at all in this country. I come from a part of [ Interruption. ]

Philip Hammond: On a point of order, Mr. Deputy Speaker. I am sorry to interrupt the proceedings, but is it in order for Back-Bench Members to speak to civil servants in the Box during the debate?

Mr. Deputy Speaker: Only Ministers or Parliamentary Private Secretaries should approach the Box.

Julia Goldsworthy: As I was saying, the right hon. Gentleman made two important points. The first was that we should remember that we get something back from the European Union and that it is not just the new member states that benefit from matters such as structural funds. Some of the poorest parts of Europe are in this country, such as Cornwall, where GDP per head of population is still less than 75 per cent. of the European average. It is right that some of those resources should be directed towards helping to boost growth in the economy there.

Kelvin Hopkins: I sympathise entirely with the hon. Lady's concern about poor regions in Britain, including Cornwall, but would that not be better addressed by a vigorous and generously funded national system of regional assistance?

Julia Goldsworthy: It would be fantastic if that were the case, but unfortunately it was a hard fight even to get Cornwall recognised as a distinctive economic region in its own right, something that neither the Conservatives nor the current Government were prepared to countenance. Only through the work of the then MEP Robin Teverson, now Lord Teverson, was the area identified as an economic entity in its own right.
	The second point that the right hon. Gentleman made was about the need for reform of the common agricultural policy and about how we should make the most of our opportunities. However, as I shall explain, we had an opportunity but we passed up on it.
	We on the Liberal Democrat Benches are not going to engage in anti-European rants. We have always been clear that we take a constructive, pro-European approach, which we do not intend to change. We welcome the fact that the EU has brought a period of unparalleled peace and prosperity to Europe, and that there has been successful integration with new member states. However, that does not mean that there is no need for a proper public debate about the future of Britain's relationship with the European Union.
	Over our 35 years as a member state we have seen the EU widen its membership and share sovereignty, from Mrs. Thatcher's Single European Act to a succession of treaties agreed by both Conservative and Labour Governments. The EU has changed beyond recognition since 1973, which means that the need for a renewed debate has never been greater. Since 1997 Labour has given away powers, but has refused to make the positive case for Europe and engage in a proper debate about the direction of the EU. The Conservatives, who promoted closer integration without referendums while in government, now indulge in populism of the worst kind, calling for a referendum to mask their own divisions. So let us have that proper debate.
	That debate could be achieved by a referendum on Britain's membership of the EU. That was raised on the Liberal Democrat Benches during the debate on the Loyal Address, and I was proud to walk through the Lobby supporting our amendment, which would have delivered that. I was disappointed that the Conservatives chose to oppose such a proposal, or are they afraid that too many Conservative Members would vote to withdraw from the EU altogether? Instead, the Conservatives will use the debate on the treaty as a proxy for that debate, despite the fact that it has much narrower terms. I am sure that those opposed to EU membership altogether will take the opportunity to air their views then, but much of the treaty is in fact about the practicalities of dealing with an enlarged EU, such as whether we need 27 Commissioners.
	We need to see the Bill in the context of that wider debate about a constructive approach. Although the Bill is short, it gives effect to the new own resources decision made by the European Council on 7 June 2007. The Bill sets out the new financial framework for the EU for 2007 to 2013, the basis of which was agreed under the UK presidency in Brussels, in December 2005. We on the Liberal Democrat Benches believe that the EU is good for the UK. We support measures to enable smooth running of the expansion of EU membership, and we believe that it would be wrong to defend an arrangement under which we were recipients of funding from eastern Europe. Those measures were part of the negotiations for a new financial frameworka part that we wholeheartedly supported, because we wish to support the poorer parts of the European Union, which means those in the UK as well as in the new accession states.
	The key point is that the negotiating objective was to trade the rebate against fundamental change. The question we must ask is: could the Government have done more in trying to achieve that fundamental negotiating objective? The Minister has not conceded today that the end result was a bad deal for the UK. It was a bad deal because the former Prime Minister totally failed us in the negotiating process during his six-month presidency of the EU. He seemed to think that any deal was better than none at all. The result is a bad deal, caused by the Government failing to identify, let alone secure, their objectives. That result is more the legacy of the former Prime Minister than the vision of the current one, which is probably why he chose not to raise it in the Queen's Speech.
	The former Prime Minister, Tony Blair, liked talking about grand ambition and using radical rhetoric about reforming the EU, but when he had his golden opportunity he failed to deliver. He totally mishandled the negotiating process before it had even started. He spent most of 2005 saying that the rebate was non-negotiable. Clearly, however, it was negotiable, and was actually being negotiated at the time he was saying that it was not. The hon. Member for Wolverhampton, South-West (Rob Marris) spoke earlier about negotiating skills; perhaps he should have shared some of his expertise with the then Prime Minister, who completely failed in that regard.
	Such a position resulted not only in the Government looking foolish. It also meant that they could not open up terms of compromise from anyone else. Perhaps it would have been better to say, Okay, we'll put our rebate on the table if you're prepared to talk about the serious reform of the common agricultural policy. But they did not, so they had absolutely no hope of delivering reform of that kind. The best that they could do was to cave in on the rebate, while giving the pathetic excuse that it related only to the expansion elements, and not to those linked to the CAP.
	This was the area of greatest opportunity, and of greatest failure. Too much was given up in return for too little reform. There was an opportunity for a long-term strategy to be put in place, but the former Prime Minister bottled it. Instead of a long-term sustainable solution to CAP reform being found, the issue was effectively kicked into touch, with a full review of EU spending and resources by the Commission scheduled to report in 2008-09. In other words, it will become someone else's problem.
	Today's debate has highlighted the fact that the urgent need for CAP reform has still not been addressed. We have seen significant reform, but we need to go further. It was good to see the reforms in 2003. Despite the problems that the Government have had with the administration of the single farm payment, it is less bureaucratic than its predecessor systems, and it is no longer awarded on the basis of production. However, there is still a need to go further, to increase trading opportunities for developing countries while safeguarding the changing rural economy. The Government should have been more ambitious in what they believed they could achieve.
	The Treasury set out its vision, to stimulate and inform debate, on 2 Decemberabout the same time as the meeting in Brussels took place. This gave an indication of where it believed the EU needed to be in 10 to15 years' time. Operating on that time scale, the Brussels Council should have been crucial to taking the first steps, yet that opportunity was missed. The Treasury document highlighted many of the issues that need to be tackled and, yes, tariffs remain one of the key obstacles to further and more fundamental reform. The Government's position in 2002, in failing to secure a renegotiation of the CAP, not only undermined their position at the summit in Brussels in 2005, but also impacted on the subsequent World Trade Organisation negotiations.
	Instead of kicking the issue into the long grass with the review, the Government should have looked much more closely at potential co-financing arrangements and at splitting the responsibility 50-50 between the EU and the national Governments. This would have had a much greater impact on the rebate than the measure that we are debating here today and the sums of money that we are talking about.
	The Chief Secretary to the Treasury talked about the way in which resources had been allocated across from pillar one to pillar two of the common agricultural policy. Those are the kinds of issues that really should have been pushed at the Brussels Council. Such an approach at Brussels would have helped to bring decision-making powersand with them, decisions over resourcesback from Brussels to a more local level within the UK. That would have put money back into rural communities, using public money for the delivery of public goods. It would have encouraged food to be produced and sold locally to high animal welfare and environmental standards, which would have cut food miles and ensured sustainability. Fundamentally, it would have made a real difference, but the opportunity to get those changes moving was wasted.

Graham Brady: I am delighted that the hon. Lady agrees with us that the Bill seeks to implement a bad deal. Will she make it clear that the Liberal Democrats will be joining us in voting against it?

Julia Goldsworthy: The Conservatives will be joining us in opposing the Bill's Second Reading today. We oppose the Bill not because we object to the principle of what could have been achieved, but because it is being expressed as such a wonderful achievement by the Government. They have not admitted to the failures involved in their negotiation of the deal in December 2005.
	People's concerns revolve around what things cost, and whether they think that they are getting value for money. The Bill deals with the overall cost, and not the effectiveness of the spending. I wonder whether it would be useful to draw those two matters together. Other Members have mentioned the problems with the European Union audit process. When the draft documents were debated earlier last year, the Government made it clear that it was important to have tougher audit constraints in place. We support them in their intent [ Interruption. ]

Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Lady. I do not know whether she is being disturbed by her colleague behind her, but I certainly am. Sedentary comments are generally not helping the debate.

Julia Goldsworthy: Thank you very much, Mr. Deputy Speaker.
	I was saying that other Members have mentioned the problems with the European Union audit process, and Ministers made it clear, when the draft documents were debated earlier last year, that tougher audit trails and constraints needed to be in place. We support them in their intent, but that will mean national Governments, as well as the EU, taking on responsibilities. Perhaps it will mean taking more responsibility down to national level, as some of the problems are caused by centralising too much of the detail at EU level. This issue was highlighted in the past week or so, when we learned that the EU auditors had refused to sign off the EU's financial accounts for the 13th year in a row. One of the issues identified by the report was poor knowledge of complex rules.
	The applications for structural funding in my constituency involved an incredibly complicated process, but the layers of complication often came not from Europe but from the regional body administering the structural funds. One of the most frustrating things was the fact that the goalposts were moved during the application process. The example that always springs to mind relates to industrial buildings and work spaces, for which funds were available. Because there were a lot of applications going in, however, the Government office for the south-west decided to raise the environmental standards required. That was great, but unfortunately there was no one available to assess those standards.
	We can see from that example how these complications can arise. The fact that the Department for Work and Pensions has failed to have its accounts signed off for the past 13 or 14or is it 17?years shows us that it is not just the European Union that has difficulty in dealing with these issues. The Government must sort themselves out as well as demanding improvement in Europe. Clearly, there are lessons to be learned at national and Europe-wide level. If we can do that, we shall achieve greater clarity and help to inspire confidence.
	The Government should concede where they failed in this set of negotiations. They should admit that it would have been better to have had no agreement under Blair's presidency, rather than an agreement that was nothing but a bad deal for the UK. If, like us, they want the European project to succeed, aspects of the Union must be fundamentally reformed. They should accept that the greatest failure in this whole process was not on the part of the EU, but on the part of our then Prime Minister in giving up part of the rebate without securing fundamental CAP reform. Achieving that reform would have been a legacy to be proud of, but it is one that this Government have failed to achieve.

Kelvin Hopkins: I am pleased to be able to speak in a European debate, and in particular to speak on the Bill that will give effect to the deal signed up to by our previous Prime Minister last December. That deal will cost Britain billions in future years and, as has already been pointed out, will bring very little to Britain in return, at least in material terms. The deal was described by  The Economist as a very poor one for Britain.  The Economist is hardly the kind of Eurosceptic, leftist magazine that I would support, but it said that no deal would have been better than that deal. I certainly agree with that.
	The previous Prime Minister negotiatedif that is a fair descriptionthe deal at the last minute, at the end of Britain's presidency of the EU. It was also done in a rather spontaneous and arbitrary manner that apparently shocked and astonished other politicians, who felt that they would at least have had to refer back to their Cabinets and Governments before making such a dramatic decision. The fact that our then Chancellor of the Exchequer was not with the previous Prime Minister at the time might have made it rather easier for him to do that deal. Perhaps he knew that he was soon to leave office, and that it would be left to his successor to pick up the tab. That is precisely what has happened, and one suspects that, behind the scenes, our new Prime Minister is, unsurprisingly, not happy about the deal.

Daniel Kawczynski: At the time, it was greatly publicised on television that the then Prime Minister, Mr. Blair, was in constant telephone contact with the current Prime Minister and that he ran everything by him. My understanding is that the current Prime Minister was very much aware of what we were signing ourselves up to at the time.

Kelvin Hopkins: I sincerely hope that they were speaking on the telephone, but it may be that they did not have the degree of harmony that one would hope for in taking such a big decision. Perhaps some of this friction between the former and the present Prime Minister that has been talked about in recent days was in evidence. I have never believed those stories myself, but perhaps there is some substance to them after all.
	The Government and my right hon. Friend the Chief Secretary have constantly emphasised the importance of giving assistance to the newer member states, which are distinctly poorer than ourselves. That is a noble and respectable objective. However, the debate was really about the common agricultural policy and its genesis was the suggestion by us that the CAP should be reformed and the budget for it reduced. President Chirac was already smarting from his defeat in the referendum on the constitution; he was extremely angry and looking for someone to lash out at. He saw Britain attacking his CAP and there was also the issue of our budget rebate, so it was President Chirac who forced the debate about our rebate on to the agenda.
	At that point, we should have responded robustly and said no dealat least until the cost of the CAP was substantially reduced. In my view, of course, we should entirely abolish it. I have said many times here and in Committee that the CAP should simply be abolished and agricultural support returned to member states. Member states are best able to judge what their own agricultural industries require and what subsidies, if any, are required. Under that system, they would also be democratically accountable. The subsidies would have to be accounted for in a direct way at elections, which is absolutely right.
	Indeed, I would go further. Much has been made of structural cohesion funding, but here again it is an inefficient way of subsidising or trying to help the poorer regions. It would be much better for member states to decide what subsidies were appropriate for their regions and to pay for them out of their own budgets rather than have to go through the circuitous budgetary processes of the EU. Money is lost in inefficienciesno doubt in fraud and corruption as welland there is frictional wastage in distributing aid in that way. I am sure that I am not alone in being slightly annoyed when I spot notices around my constituency and elsewhere that are funded by the EUindicated by the yellow stars on the blue background. That is effectively our money being used, yet it is claimed that it is European money. If we were a poorer nation and we were receiving a net contribution, that would be fine, but we are actually net contributors and only somecertainly not allof that money is redirected back to Britain.
	As a socialist, I am strongly in favour of redistribution from those who can afford it to those who are in need. If we did that in a sensible, fair and non-corrupt way, it would represent a sensible way forwardbut we do not do that through the structures of the EU. I have said before and I will keep on saying that a system of simple fiscal transfers from the richer to the poorer nations of Europe would be a much more efficient and much fairer way of doing things. The relevant member states could then decide how to allocate those extra funds to their own peoples, and be democratically accountable to them in doing so. We should repatriate agricultural policy and leave regional and structural funding to member states, not have it allocated through the EU.
	Various estimates have been made of the cost of the EU to Britain. This Bill will cost us an extra 7 billion by 2013

Colin Breed: Cheaper than Northern Rock.

Kelvin Hopkins: Certainly in terms of borrowing it is, but that was a debate for earlier today.
	Other costs are associated with the CAP, such as higher food prices and market distortions. It is estimated by the OECD that that costs Britain 15 billion a year, so the CAP is not just a matter of subsidies to the budget, but a real further cost in higher food prices as well. The CAP should be abolished, not reformed. Reform can mean many things to many people, but it usually means not very much to anyone. The reality is that reform has been graduala bit here, a bit thereand sometimes it is two steps backwards rather than two steps forwards. The reform programme has not been a great success.
	We should have used the lever when the budget was being negotiated. We should have refused to agree until serious progress was made towards the eventual abolition of the CAP. We could have argued for that on the basis that what was saved could be used directly to help the poorer nations of Europe that are struggling to advance the living standards of their peoples. That would be far preferable.
	A number of estimates of the cost of EU membership have been made. There is a Swiss viewSwitzerland is outside the EUset out in a Europe 2006 report. It states that full EU membership would cost the country 1 per cent. of the Swiss national income. Well, 1 per cent. of national income in one year may not seem very much, but if it is compounded over many years or decades, it becomes a very large sum of money indeed. It has been estimated elsewhere that the cost of the European budgetary and economic arrangements to Britain is about 0.5 per cent. of our gross domestic product. Again, that may not sound much in one year, but if we compute it over 40 or 50 years, it becomes a very substantial sum. Many of us have argued that how the EU is constituted at the moment does not actually benefit the peoples of Europe economically, so we would do better to have different economic arrangementsnot to break up the EU entirely, but to have different economic arrangements within it, with each member state deciding what is most appropriate for its own economy.

Angus MacNeil: The hon. Gentleman is making a thoughtful argument about the need to abolish the CAP. Does he have similar views about the common fisheries policy?

Kelvin Hopkins: Indeed. The hon. Gentleman is right to mention that. There may not be a lot of fishing in Luton, North, but we eat fish. I have seen an estimate that if something is not done, all the fish will be fished out of the seas by about 2020, which would be a tragedy for the whole world, as we cannot replace fish stocks. We have to guard fish stocks and I believe that member states would be best at guarding their own fish stocks when they knew that their futures depended on them. When fishing is going on in other people's fishing waters, far less concern will be expressed than when it is a matter of protecting one's own waters. Giving each member state responsibility for its own fish stocks in its own fishing waters would be a sensible way of protecting fish stocks for everyone.
	I am afraid that I cannot support this Bill tonight. It would be dishonest for me to go through the Aye Lobby on this particular Bill. However, I would like to support what the Foreign Secretary said the other day. He argued that we should not promote the development of Europe as a superstate, but that Europe should be an association of independent and democratic nations. I agree absolutely and I have made that point very strongly in the past. What we are seeing is a constant drift towards that superstate and at some point we have to start saying no. We could start to say no by abolishing the CAP and restoring some of the functions carried out by the EU to member states. We could then work together on a co-operative, fraternal and sororal association of states to everyone's benefit. That would not only benefit everyone's living standards in Europe, but would improve our relations with our neighbours as well. We would not have so many arguments with our French neighboursI must say that I love France very much and go there every year for my holidaysif the CAP did not exist. I suggest that we should take a much tougher line next time. Sadly, I cannot support the Bill tonight.

Graham Brady: I realised, slightly to my surprise, that I had been missing EU debates over the past few months, so I could not resist the opportunity to participate in the first of what will probably be three opportunities to discuss EU-related business in the next few months. It has been a pleasure to listen to at least some of the contributions, perhaps most especially that of the hon. Member for Luton, North (Kelvin Hopkins). I frequently come to the same conclusions as he does: for instance, his conclusions on repatriating agriculture and regional policy are eminently sensible. I usually come to those conclusions for opposite reasons; none the less I strongly commend the courage that he showed by making it clear that he will vote with his conscience this evening, rather than being cowed into going along with the party line.

Kelvin Hopkins: I should have said that when we talk about such issues, it is a matter of not left or right, but democracy. We might agree on that.

Graham Brady: The hon. Gentleman makes his point well, as ever.
	We are debating a small, defined Bill that will implement an agreement that was made in December 2005. The House last had an opportunity to debate the deal on 8 May 2006. It does little credit to the way in which we deal with EU business in the House and in this country that the Bill simply gives legal force to an arrangement that has been in effect since 1 January. Now, 11 months later, the House has the chance to debate a Bill that will implement the deal that was made by the former Prime Minister, Mr. Blair, nearly two years ago.
	The Bill and the deal that it will implement are bad measures, but they are also bad because of what they say about the state of the EU and of Britain's ability to negotiate a better arrangement and a better deal within the EU. The Bill is bad not least because this is a time of tightening public finances, when the Treasury and the Government face more difficult decisions about funding and public services in this country. The situation could become considerably more difficult in the year ahead, and even worse in the year after that.
	The Bill represents a change in our financing commitments to the EU that, according to the excellent Library note produced for the debate, will contribute to a net increase in the UK's contribution of 2.3 billion every year. That is a cause of considerable concern. The Chief Secretary seemed to try to justify it on the grounds that although it might cost us more, that was okay because it would also cost France more. I am not sure that that explanation would cut much ice with my constituents or with his.
	The Chief Secretary went on to say that the rebate had not been cut, but rather that parts of it had been disappliedas far as I can see, that amounts to the same thing. The rebate applies to fewer aspects of EU funding than it used to. Even though the absolute amount of the rebate may rise in line with our rising contributionthat point was made earlierwe will effectively see a cut in the scope of the rebate, which will contribute to an overall substantial increase in the net contribution from this country to an unreformed EU.
	A number of Members have already well made the point that the Prime Minister at the time, Mr. Blair, went to Brussels with an absolute commitment that he would achieve radical reform of the CAP and that only in those circumstances would it be acceptable to negotiate away part of our rebate. Instead, he returned with nothing.
	My good friend the right hon. Member for Rotherham (Mr. MacShane), a former Europe Minister, is no longer in the Chamber. One of the pleasures of participating in European businessalthough you are looking a little sceptical, Mr. Deputy Speaker, if I may say so

Mr. Deputy Speaker: Order. All the speeches I hear in this House are a pleasure.

Graham Brady: I shall try not to end that state of affairs.
	It is a pleasure that we tend to attract the same cast list to participate in such debates and we occasionally see the spectres of former Ministers for Europe. Only one such former Minister has made a speech so far this evening, but, as a former shadow Minister for Europe, I might be falling into the same habit.
	The right hon. Member for Rotherham seemed to suggest that CAP reform would require endless negotiations. He talked about networks and even suggested that the Government should create a new fund to pay the Conservative party to lobby in Europe in favour of CAP reform. I do not support state funding of political parties, so I would find that rather difficult to justify, but I can see that his logic is such that after the woeful inability of the Labour Government to negotiate CAP reform, he is even prepared to accept the job being subcontracted to the Opposition instead.

David Wright: You have no one to talk to in Europe.

Graham Brady: The right hon. Member for Rotherham talked a great deal, but he missed out one key possibility that was available to Mr. Blair two years ago: to use the strongest card that we had, which was won by Lady Thatcher in 1984the British rebate. As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) said in his opening speech, we always made it clear that we would support sensible measures to negotiate the reduction and CAP reform balanced against a reform of the British rebate. Instead, we got a hopelessly one-sided deal.
	So, what is the upside to the deal that was secured and the arrangements that we are considering? Mr. Blair certainly failed to secure the prize of his key objective of CAP reform. Not only did he give up billions of pounds of British taxpayers' money but, more shamefully, he gave up a key bargaining point. He was wholly culpable for the fact that we conceded that crucial part of the British rebate while getting nothing in return. We should not readily forgive or forget that.
	It should not be a surprise to right hon. and hon. Members of any party that the deal is so unpopular, but that could easily have been missed. The Chief Secretary is an affable, likeable man. It would have been easy to draw the conclusion from the tone and demeanour of his lengthy opening speechI accept he was generous in giving waythat the Government were presenting a great triumph. One might expect Her Majesty's Opposition to be most dismayed by the sacrifice of such an important part of the British budget rebate and cross about the Government's failure in Brussels in 2005, but I was delighted that the hon. Member for Falmouth and Camborne (Julia Goldsworthy) confirmed that her party would vote against the Bill. The Liberal Democrats are the most Europhile and federalist party in the House of Commons

Charles Walker: The smallest as well.

Graham Brady: And the smallest [ Interruption. ] They are not quite the smallest; we should give credit to one or two others who are in the Chamber.
	When we debated the matter in May 2006, the hon. Member for Twickenham (Dr. Cable), who led for the Liberal Democrats, made his position clear. He said that the deal was bad and that it had come about because the Government had failed to secure their negotiating objectives. I am therefore delighted that the hon. Member for Falmouth and Camborne maintains that position, under the leadership of the hon. Member for Twickenham. Given that he has given such a strong lead on the matter, perhaps the Liberal Democrats should consider keeping him.

Angus MacNeil: Does the hon. Gentleman agree that, for a United Kingdom that faces a 39.6 billion deficit in the next six years in the public sector borrowing requirement, to give up the rebateor at least part of itis puzzling?

Graham Brady: It is puzzling at the very leastincomprehensible is how most of our constituents would view it.
	The deal that Mr. Blair made is therefore unpopular with Conservatives, Liberal Democrats, and, it has just been confirmed, Scottish nationalists.

Daniel Kawczynski: And a few good Labour men.

Graham Brady: Indeedand a few good men and true on the Labour Benches.
	As my hon. Friend the Member for Runnymede and Weybridge reminded us, not only Opposition parties were unhappy with the deal. The then Chancellor of the Exchequer, now Prime Minister, was reported to be quietly fuming. There was considerable press comment, clearly stimulated by Treasury briefings. Several newspapers reported that Mr. Brown was unhappy that the deal would cost the UK an extra 1 billion a year and that he had not taken part in final negotiations. Attempts were clearly made to distance the then Chancellor from the deal that Mr. Blair had made. Unattributed briefings on 18 December 2005 stated that Mr. Blair had freelanced to strike a deal on Friday night and early Saturday morning, without speaking directly to his Chancellor. It was also reported that the disclosures threatened to open up a fresh and damaging rift between the two men and that, under the deal that followed 17 hours of intensive talks, Mr. Blair promised to surrender a further 1.7 billion of the rebate first secured by Margaret Thatcher in 1984. My maths is not that good, but I believe that that is 100 million given up for every hour of the negotiations.
	The then Prime Minister, who had set himself such a clear target and easily identified goal, suffered a remarkable defeat in the negotiations. There was further criticism that the way in which the deal was structured would lead to costs being back-loaded. It was suggested that a time bomb had been left for the new Prime Minister who would take office in the next year or two. It was reported that the costs would gradually rise from zero in 2008-09 to 1.9 billion a year by 2013.
	This Second Reading debate and the Bill, however short, are allegories of everything that brings the House's dealings with EU business into disrepute. We are being asked to approve another 2.3 billion a year after, not before, the event. We all know that the deal was bad. Conservatives, Liberal Democrats and even the Prime Minister, when he was Chancellor, opposed it. As the right hon. Member for Rotherham told  The Daily Telegraph shortly before the deal was made:
	Even out and out pro-Europeans like me could not accept a one-sided deal that only removes the rebate. That would be very difficult to get through.

Angus MacNeil: Where is he?

Graham Brady: The right hon. Gentleman is not here at the moment, but we will watch carefully to ascertain whether he makes it difficult to get the deal through by joining us in voting against the Bill. The Government are indeed trying to force through a one-sided deal under which they have given up the rebate and achieved nothing in return.
	Today, the Chief Secretary assured us that the Government believe that the deal is good, and suggested that it has the Prime Minister's support. That is why they will try to force it through. The debate is welcome because it is an opportunity for all hon. Members to nail their colours to the mast. On the one side are our constituents' interests, and our need to defend their hard-earned money and to stand up for the important case for reforming the CAP to reduce food prices in the UK and remedy the damage that it does in the developing world. On the other side is the Labour Government's need to maintain face. Even though the previous Prime Minister was responsible for the failed negotiations, we are being asked to believe that the current Prime Minister now supports something to which he clearly objected violently at the time.
	Today is the first of several opportunities to debate EU matters in the coming monthsin some ways, it is the most fundamental opportunity. Only if the UK is prepared to use its negotiating hand, stand firm and, even at the risk of unpopularity from time to time, stand up for the national interest will we achieve the right deal for Britain and the right reforms in the EU. The Government, in presenting the deal and introducing the Bill, not only surrender 2.3 billion of British taxpayers' money but give up our strongest hand in EU budget negotiations in future.

Quentin Davies: I rarely agreed with the hon. Member for Altrincham and Sale, West (Mr. Brady) when I sat on the same Benches as he. Judging by his speech, it is no more likely that I shall agree with him in future, on the subject of our debate. However, he is an honest and able man. He is always courteous in debate and in private discussion. It is therefore a pleasure to follow him in the debate. Doubtless we shall both take part in other debates on the subject in futurein the near future if we are so lucky as to catch your eye, Mr. Deputy Speaker.
	Let me say at the outset that I believe that the settlement is superb and I am unambiguously delighted that we have secured it. I shall vote for the Bill with enthusiasm. Indeed, it would be unedifyingto use a stronger word, obsceneif we enforced against much poorer countries in eastern Europe the rebate that we secured in the 1980s under Margaret Thatcher against countries that were much richer than us at the time, such as France, Germany, the Benelux countries and the Nordic members of the Union. It would be taking money from someone who was much poorer.
	The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) sincerely regards himself as a great advocate for Polanda country for which, although I do not have his family connections, I have always had the greatest admiration, for a host of reasons, and I am delighted to have so many young Poles in my constituency doing such a good job and being such good citizens. I find it extraordinary that the hon. Gentleman, given that he honourably and naturally takes that position, should say that we should enforce against Poland the mechanism that we secured to defend our interests when we were much poorer than the average member of the Community, as it was then called. I hope that he will reconsider the matter, although I do not know whether he will do that in time to change his vote tonight.

Daniel Kawczynski: The hon. Gentleman knows that this is only the start. Further waves of relatively poor countries will enter the EU. Is he claiming that he is prepared for Britain to have even less money in future, when those other waves of poor countries join the EU from the Balkans and beyond? The Foreign Secretary made a speech this week in which he said that he looked forward to an EU of which countries from north Africa and the middle east were also members.

Quentin Davies: I did not listen to that speech, but I do not think for a moment that the Foreign Secretary suggested that north African countries should join the European Union. He was taking about a free trade agreement, which is a different matter, and something that we already have with a number of countries outside the European Union. The hon. Gentleman has got that speech wrong; perhaps he would like to look at the record again and get it right.
	As for further enlargement, the only country for which that is more or less established is Croatia, a small country that will create minimal and insignificant strains on the budget. Beyond that, Serbia and Moldova are possibilities. There is great scepticism about going much further than that. That is a different point, however, and you will correct me, Mr. Deputy Speaker, if I get dragged down into discussion of the natural limits of enlargement.
	When I left the Conservative party, I said that it had become irretrievably cynical and opportunistic, and this evening's debate has shown how true that judgment was. There are only two possibilities: either the Conservative party is engaged in deliberate obfuscation or it is extremely confused. Its policies on the European Union generally, and enlargement specifically, completely lack coherence. It says that it is in favour of enlargement, but it is not prepared to pay for it.

John Redwood: At the next election the hon. Gentleman might wish to fight a seat representing people in a much poorer part of the country than he currently representsfor example, a seat in the inner cities. How much extra tax should such people have to contribute to pay to Poland?

Quentin Davies: The hon. Gentleman knows something about economics, and about something called a dynamic model, in which the indirect and subsequent consequences of any action must be taken into account. I believe that the settlement will result in enhanced revenues for the European Union as a whole: we will all have more money to play with.
	That point has already been made this evening, using the example of Ireland. It is wonderful for us that Ireland has become so prosperous. I do not say for a moment that Ireland has become prosperous only because it has been in receipt of cohesion and structural funds. The Irish are extraordinarily enterprising people, and once released from the autarky pursued by their Governments in the initial generations after independence, some take-off was likely. Since the Whitaker report in the 1960s, they have invested in education in a big way. As Members on both sides of the debate have said, they have pursued sensible and attractive tax policies. It must be a matter of delight to us that not just Ireland but Portugal and Spain have been completely transformed since they joined the European Union, because it contributes to our prosperity.

Angus MacNeil: rose

Quentin Davies: I shall give way to the hon. Member for Na h-Eileanan an Iar (Mr. MacNeil) who is going to ask me, of course, whether Scotland would do better in the European Union if it were independent.

Angus MacNeil: If the hon. Gentleman chooses to answer his own question, he is more than welcome to do so. I was going to ask him to what he attributes Iceland's success. He has said X, Y and Z about the European Union and Ireland, but Iceland has come from exactly the same baseline and has done just as well, if not better in some sectors.

Quentin Davies: Having been shadow Secretary of State for Northern Ireland for three years, I know a little about Ireland, but I must make the terrible confession that I have never made a study of Iceland. I hope that the hon. Gentleman will forgive me if I do not embark on an analysis of Iceland's economic experience now.
	The second big problem is that the Conservative party has shown this evening that it does not want to face up to the facts. I put to the hon. Member for Runnymede and Weybridge (Mr. Hammond) the two most striking factsI described them as salientabout the package. One was that for the first time the share of agriculture in total spending is now on a downward path. That is enormously important, as it means that the issue of agricultural spending is being resolved over time. As anyone who can do elementary logic will know, the curve could be steeper or less steep, but we are going in a direction in which the common agricultural policy problem will inexorably be resolved. The hon. Gentleman did not want to recognise that.
	The second fact that I put to the hon. Gentleman was that, under the settlement, France and Italy will increase their contributions at twice the rate of those of this country. That is also unprecedented, and an extraordinary achievement. Signor Prodi and Monsieur Sarkozy will have a much more difficult time defending this settlement in their national assemblies than the Government will have here. I have some sympathy for them, and I am glad that we have reached this sensible compromise, for all the reasons that I have mentioned. The hon. Gentleman did not even recognise those facts. I intervened twice, and his response was to run away from them and evade the points that I made.
	I must tell the hon. Member for South-West Hertfordshire (Mr. Gauke) and the hon. Member for Runnymede and Weybridge, who is not in his place at present, that if they are serious about wanting to come into power, being in denial about the facts is a very bad basis for statesmanship and a disastrous basis for government [Interruption.] I did not hear that point; if the hon. Member for Broxbourne (Mr. Walker) wants to make an intervention, I shall certainly take it. Members have been generous in taking interventions this evening, and I am happy to live up to that convention.
	The third problem, which goes back to good faith, or perhaps just to a lack of information or understanding on the part of Eurosceptics, both in the Tory party and in many parts of the press, is the rubbish and systematic, libellous and defamatory nonsense talked the whole time about the Court of Auditors and corruption and waste in the European Union. It is perfectly true that the Court of Auditors has regularly put reserves on the accounts that it has signed.  [Interruption.] I will give way again to the hon. Member for Na h-Eileanan an Iar, but I hope that I can proceed after his intervention.

Angus MacNeil: Before we move on to the subject of corruption, we should acknowledge the deep, inbuilt, structural problems in the common agricultural policy. Crofters in the highlands of Scotland get less favoured area support of tens to twenties of pounds per hectare, whereas farmers in Luxembourg, other parts of Scotland, England and the European continent get support of up to thousands of pounds per hectare.

Quentin Davies: The hon. Gentleman will forgive me if I do not burn the midnight oil to discover the rates of payment to crofters in the Highlands and Islands. His figures might be right or wrong; I am afraid that I cannot comment on that.
	A regular feature of Eurosceptic rhetoric both from Conservative Members and from the press has been to say that the European Union is a sink of corruption, that the Court of Auditors has never approved the accounts, and to ask how we can go on being part of such an organisation. Of course it is true that every human organisation is exposed to fraud, corruption, mismanagement or waste; there is no such thing as perfection in these matters. If I look back to the Conservative Government, there were egregious cases of waste and, indeed, corruption in the national health service in Wales at one point. We have also had corruption in local government. One can never clear that up completely. This country has a very good record, and northern Europe as a whole has a very good record and good traditions in this matter, particularly Germany, Scandinavia and the Netherlands. Therefore, by world standards, such cases are few and far between, but they exist in all institutions.
	I suspect that the hon. Member for Altrincham and Sale, West knows this, but I do not know whether the other Conservative Eurosceptic Members do, or whether they are genuinely bemused by their own rhetoric or that of the Tory press. The fact of the matter, however, is that the Court of Auditors has not for many years put a reserve on the Commission's accounts. It has criticised not the Commission or the institutions of the Union, but the member states, which in many cases distribute the money.
	The logic behind the criticisms made of waste or corruption in the European Union is that we should have a federalist policy, and that member states should stop distributing structural funds and agricultural support of various kinds. The Commission should do it directly, and there is every chance, given its record, that it would do it very well. I have a little experience of the Commission, and it is a superb bureaucracy. There are few bureaucracies around the world that are so professional, good, clean, well motivated, efficient and so small in relation to the money that they are disbursingeven if it has 20,000 people, that is a small number in comparison with bureaucracies around the world and the money that they disburse. Getting 300 directives through and creating the single market in a few years was a formidable achievement. I am not advocating a federalist policy, but that is the logic of what Conservative Members are sayingthey will not like it, but I ask them to examine honestly the logic of their criticism.
	The problem lies in the member states, not in the Commission. If the Conservative party thinks that a radical solution is required, it ought to be a federal solution, extending the competence of the Commission and reducing the role of the member states. That would be a logical solution, but is it the solution that the Conservative party is suggesting? No, because the Conservative party will not recognise reality. The Conservative party will not draw the logical conclusions from its own position. The Conservative party will simply go on talking contradictory nonsensefor that it is what it is: it is contradictory and it is nonsense, and it is about time that it was exposed as such. But that is extremely difficult in this country, because the Eurosceptic press will never reproduce the points that I am making.  [Interruption.] Of course it will not: we know that. So the public are genuinely bemused about the issue, which is extremely worrying. Here is a consistent and systematic libelit is no less a libel for being consistent and systematic, and for being pursued for many yearswhich has infected public opinion about the European Union.

Angus MacNeil: Will the hon. Gentleman give way?

Quentin Davies: Will the hon. Gentleman give me a moment?
	I do not think the Eurosceptics should be proud of that achievement. I do not think they should be proud of having deceived the public. I think they should be ashamed of using such methods, and I hope that the more honest among them will now examine the facts. I hope that they will look at the report from the European Court of Auditors, which they will find in the Library. If they do, they will see that I am right. The reserves, I repeat, relate to the member states' role in the disbursement of Union funds, not to the Commission and the other institutions of the Union itself. That is very important.
	It is clear to me that the Conservative party is engaged in pure political opportunism. The Conservatives do not wish to draw the logical conclusions of their own policies, and they do not wish the public to draw those conclusions. They want to be all things to all men. They want to go in for doublespeak. They want to go around the Conservative clubs and talk to the chauvinists there. We all know that such people exist in Conservative clubs throughout the country, and I have met a great many of them over the past 20 years. The Conservatives want to go around those clubs and say, Get these nasty foreigners out. We aren't going to let our country be taken over by France and Germany, and so on. They want to come out with all that rhetoric, which will be popular in their constituencies and with the Tory party, but they know that it will not play with those on the middle ground of politics, so they will say to those people, Oh no, we really believe in our membership of the European Union; we're totally signed up to it.
	I can give two reasonsindeed, I could give morewhy it is clear that the Conservatives are not genuinely signed up. One is their policy on the European People's party, which was a gratuitous unprovoked insult to those who had been their best friends for generations.  [Interruption.] That is what it was, and how can they possibly expect it to be forgotten? We are talking about having a relationship with someone, signing an agreement agreeing to sit with someonein this case, in the European Parliamentfor five years, and then saying We're going to tear up this agreement because we don't like it. We're going to spit in your face. Do the Tories really think that if they ever came to power, that would be forgotten? Do they really think that a bank of good will would be waiting for them if, by some awful mischance, they ever found themselves in Downing street? They would be far less well placed to negotiate anything on behalf of this country; that is absolutely clear.
	What will happen if the House turns down the Bill tonight? Let us again draw the logical conclusions from the Conservatives' position, for they do not want to do it themselves. There will be an unnecessary and gratuitous crisis in our relations with the European Union. People will say, The British Government signed up to this, and then backed out of it. The east Europeans will say, My goodness me! We thought that the British were our friends, we thought that they supported us in enlargement, and now the Tory party has got itself a majority in Parliamentif that were ever to happen, which I trust it will notand turned the deal down. It would take a long, long time to restore our reputation for good faith after that.
	I put it to you, Mr. Deputy Speaker, that there are only two possible explanations. Either the Tory party has not realised the logic of its position, or it has, and it wants a crisis in our relations with the EU. That is why the Tories talk nonsense about pulling out of the common fisheries policy or the social chapter. It is really shorthand for creating a crisis and putting us in an impossible positiona position in which we could not pursue the principles that they have set out, and will I suppose set out in their manifesto, and still maintain our full membership of the European Union. That is a very serious matter for the House, and I am glad that the Tories have so blatantly revealed what is clearly their agenda.

Daniel Kawczynski: Thank you for calling me to speak in this important debate, Mr. Deputy Speaker.
	If the Bill is passed tonight, it will set a dangerous precedent. It will mean that every time a new wave of relatively poor countries joins the European Union, we in the United Kingdom will somehow have to give up more of our taxpayers' money to support those new member states. As I told the hon. Member for Grantham and Stamford (Mr. Davies), the Foreign Secretary has stated publicly that he wants to expand the European Union to include countries in north Africa and beyond. The hon. Gentleman disputes that. Only time will tell, but what is genuinely agreed on all sides is that Turkey will inevitably wish to join the European Union and become a full and active member.
	I met the Serbian Foreign Minister today. He spoke of his concern about the possibility of Kosovo's becoming independent. If that happens, Kosovo will want to join the European Union as well. Many other poor countries either wish to join the EU or are in the process of actively submitting application forms. Ukraine, Georgia, Bosnia, Macedoniaall those countries are very poor, and will require massive financial assistance. At a time when budgets are being tightened here in our own country, with an ageing population and a massive borrowing requirement, the Government want us to go on bailing those countries out. I understand that we, as a nation, are already 700 billion in debt.

Andy Burnham: Given the thrust of the hon. Gentleman's remarks, does he agree with the comments of his party leader in a speech to the conference of the Movement for European Reform on 6 March this year? He said:
	The prospect of eventual Turkish membership is hugely importantnot just for Turkey itself, but to demonstrate to the Muslim world that the EU is not an exclusive Christian club.

Daniel Kawczynski: No, I do not wish Turkey to be a member of the European Union. As I said, we are currently 700 billion in debt as a nation, and this year alone we borrowed 34 billion. My constituents will find it extremely difficult to comprehend how the Government could forgo such a huge rebate when we are borrowing so much money and our own public services are at breaking point.
	The Chief Secretary says that this is all about helping eastern European countries, and that we in the Conservative party are against eastern Europeans because we oppose the Bill. I feel very angry and upset about his comments. Never, in two and a half years, have I sat in the Chamber and been so incensed and appalled as I am by rhetoric of that kind. The Chief Secretary claims that we are against Poles because we are not prepared to give them huge financial subsidies. I feel very insulted by him. This is the arrogance of power. This is what the Labour Government are all about: they cannot justify giving up the rebate, so they want to insult us by saying that we are against eastern Europeans. What I object to is our country, the United Kingdom, footing almost the entire bill for the assistance of eastern European countries.
	Of course all of us in the Chamber want to help those countries, which underwent a terrible experience during the days of communism and the iron curtain. However, we have helped them a great deal in the past. It was Britain, and Margaret Thatcher, who insisted that they enter NATO and become members of the European Union. We wrote off all the debts that they had incurred during the days of communism. We have always stood by the Poles, far more than many other European Union countries, and what the Minister said was very misleading.

Mr. Deputy Speaker: Order. I am happier if the word misleading is used as little as possible in debates, and, if it is used, is preceded by the clarification that no deliberate intent was implied.

Daniel Kawczynski: Yes, of course I retract that and apologise, Mr. Deputy Speaker.
	We are also one of the few countries that have allowed Poles and other eastern Europeans to come in and work, and they have made a tremendous contribution. The way to help the Poles, however, is to facilitate trade between our two countries; we should do everything possible to help British companies trade with Poland and other eastern European countries. Vast state subsidies and giving up our own rebate are not the answer.

Kitty Ussher: The hon. Gentleman talks about helping the Poles. Does he think it would be helpful to them if wethe UKgot a windfall from enlargement and their joining the EU?

Daniel Kawczynski: Nobody is talking about us getting a windfall from them. Conservative Members are scrutinising the Government on how they managed to give up such a large slice of our UK rebate, which is a totally different matter.
	The Minister will not be surprised to hear that I have been to eastern Europe on many occasions. During visits to farms in Romania, for instance, we find that they are taking a great deal of our British taxpayers' money, but simply not complying with the rules and regulations that our farmers have to comply with.
	We should have stood up for the British national interest during these negotiations. As hon. Friends have said, we should have used the veto in these discussions on the rebate. We are too important and big a country not to be able to stand up and use our veto. That would have been possible, and it should have been used.
	We have tremendous support across Europe, not necessarily over the rebate but certainly over the future of the EU. Many eastern European countries are very troubled about Brussels railroading them on some of their concerns and the Franco-German control of agenda setting in the EU. They want to challenge that stranglehold, and they look to the UK for leadership. I feel passionately about that and will try to help my party find the right-of-centre partners in eastern Europe that the Minister spoke about.  [Interruption.] He laughs from a sedentary position, but there are in fact many young right-of-centre politicians across Europe, such as myself, who feel passionately about having a European Union of sovereign states that trade and want to work together in co-operation, but also to guard their own sovereignty. There are a lot of them; I can assure the Minister that I myself have spoken to many young right-of-centre politicians from across eastern Europe who will work together to ensure that that happens.
	In 1984 Margaret Thatcher showed that it was possible for the UK to fight for a rebate, and I wish to take this opportunity to acknowledge the tremendous courage she displayed all those years ago in standing up for our country's interests. It is clear that the current Prime Minister played a large role in the debacle over handing back our EU rebate. He was in constant contact with the former Prime MinisterBlair. He has built a reputation of having been an iron Chancellor, but he displayed a great deal of weakness over the EU rebate.
	I wish to put it on the record that I am very disappointed about the lack of help from Poland and other eastern European states in the negotiations over the UK rebate. I have openly stated to many politicians from Poland and other eastern European countries how disappointed I am that they did not come to our aid over these critical negotiations. Britain has done more for Poland than any other European country has, and it is very disappointing that on this one occasion when Britain needed help and support from her allies in eastern Europe, Poland and others did not do anything to support us. Britain was, after all, at the forefront of getting them into the EU.
	Little has been said about the accounts, which have not been signed off. The hon. Member for Grantham and Stamford suggested that Opposition Members were trying to whip up hysteria about them. While trying not to be rabid on the issue, I must say to him that it is concerning if the media report repeatedly, year after year, that there have been complications and difficulties with the auditing of accounts. All of us want to ensure that those accounts are watertight and can be presented to constituents as representing value for money.

Quentin Davies: Will the hon. Gentleman confront for a moment a point that I put, which is the truth: the criticism is not to do with the Commission, as the problems are in the member states? If he understands that, he will see that this issue cannot be used as an argument against the EU itself. It is not the EU or its institutions that are in any way corrupt or wastefulor if they are, it is only to a very minor degreeand the auditors have not made such a suggestion for years. The problems exist in member states, and especially some in southern Europe. The problems could be resolved by having a more federalist concentration of power in the EU. Does he want that?

Daniel Kawczynski: No, I do not want that, but I want the accounts to be properly vetted so that there is more transparency.
	Eastern European countries are struggling to spend the existing vast sums of money that they have been given. During my various trips to Warsaw, people have confided in me that there are difficulties with some of the time scales that the EU has given the Poles to spend the money on infrastructure, as they are unrealistic. It is expecting the Poles to spend billions of pounds on building vast motorway networks across the country when that will simply not be feasible within the time frames given, due to environmental considerations and all the other complications that, as the Minister will be aware, major infrastructure projects inevitably bring about.
	The Minister did not mention at all in his speech where the money was going, and I was slightly disappointed about that. If he is so confident that this British taxpayers' money will be of great benefit, it is a disappointment that he did not have one or two examples to share with the House as to what it could be spent on. I would have liked to hear an assurance from the Minister that some of the money would be spent on helping these countries reduce their carbon dioxide emissions. Owing to its communist past, Poland has hugely inefficient steel plants, such as Nowa Huta in Krakow, that belt out hundreds of thousands of tonnes of emissions. It would be at least nice for some of the money to be spent on helping countries to reduce their CO2 emissions, so I look forward to hearing in the winding-up speech how some of the money will be spent.
	The Minister spoke a lot about eastern Europe, but he did not mention British overseas territories. Having spoken to representatives of the Cayman islands, the Turks and Caicos islands and many other British overseas territories, I know that they get a raw deal from the EU. They are currently experiencing terrible problems in getting their hands on money to which they are entitled under European Union terms. Will the Minister assure me that the rebate that he has given away does not affect British overseas territories, and will he give me a commitment that he will help the Governments of the Cayman islands and the Turks and Caicos islands get what they are entitled to? They are fighting to get their fair share and they are coming across a great deal of red tape and bureaucracy.
	The hon. Member for Falmouth and Camborne (Julia Goldsworthy) mentioned her concerns about parts of rural England not receiving their fair share of money. I represent a rural part of the UKShropshirethat has massive underinvestment in basic public services.
	If I may, I shall explain why I am so vehemently opposed to this outflow of money to eastern Europe. The reason is the problems that we face in the United Kingdom on public services. I visited Coleham primary school in Shrewsbury in my constituency. Its headmistress has worked out that she receives 711 less per pupil than the average per child fundingI am not talking about the best schoolsand that equates to a 300,000 shortfall for one primary school in my constituency. I asked how that affects her. She said, Clearly we cannot buy certain books or put the heating on when we would like, and we have various problems. How can we be experiencing such problems in the fourth wealthiest country in the world, yet at the same time be giving so much to eastern Europe?
	The Royal Shrewsbury hospital is millions of pounds in debt. I have told the relevant Minister that we have a huge funding shortfall. Our local education authority is ranked 145th out of 149 LEAs for funding. Later this evening, I shall present a 16,000-signature petition that aims to prevent the closure of Shrewsbury ambulance control centre. Can one imagine such a thing? At the same time, the socialists are giving my taxpayers' money to the eastern Europeansit is unbelievable.

Angus MacNeil: With the greatest respect to the hon. Gentleman, rather than arguing against giving money to the eastern Europeans, could he not argue against nuclear weapons and make sure that money was not being wasted on weapons of mass destruction and instead was helping his constituents?

Daniel Kawczynski: No. The hon. Member for Grantham and Stamford said that he did not want to give an analysis on Iceland, and I will not start giving an analysis on nuclear weapons.
	I believe that much of this is about how effective the negotiators were in dealing with the rebate. Today, if one speaks to Icelandic politicianswe are returning to the theme of Icelandone finds that they still talk in derogatory terms about how Roy Hattersley negotiated the fishing stocks between Britain and Iceland back in 1978. They still laugh at that. In political circles in Reykjavik it is still talked about, and people there say that the poor negotiation and his poor performance as a negotiator cost the United Kingdom millions of pounds. The deal before us will be talked about in 20, 30 and 40 years' time as an appallingly bad negotiated settlement that has cost our taxpayers and our children billions of pounds.

Austin Mitchell: I do not want to follow on from what the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) said, but I must put him right on Iceland. What he mentioned was not done by Roy Hattersley and it did not happen in 1978, because he was not in the Foreign Office at that time. The settlement was in 1976 and the proposals that Roy Hattersley turned down were made in 1974. The hon. Gentleman would have done better to stay off Iceland altogether. Apart from that, he made a good speech.
	This is a nice opportunity to take part in one of the three-monthly contests between Eurosceptics and Euro-enthusiasts on which we spend so much time in this House. It is nice to welcome two new Ministers in the field as umpires or referees in the contestmy congratulations to both of them. I shall not put forward a view that accords with their policy or with official policy, because I shall not vote for this measure, and I would not want to give the impression that speeches by Labour Members will be, with one exception, that of my hon. Friend the Member for Luton, North (Kelvin Hopkins), panegyrics on Europe.
	I am sorry that my hon. Friend the Member for Grantham and Stamford (Mr. Davies)my new Friendhas left the Chamber, but it was good to see him get all that accumulated bile about the Conservative party off his chest. I am sure that it did him a lot of good. It was interesting to see, but I do not think that those views will do him as much good under our new leadership as they would have done under the previous leadership until Julythe bid is a bit late.
	The basic problem that we face with this Bill is that it adds to the costs of belonging to the European Union, which are already unacceptably high for this country. After Germany, which is much more generous and committed towards Europe, we have long been the second highest contributor. That situation has been compounded by the concessions made on the rebate by our previous Prime Minister, whose name slips my mind temporarily, earlier in the year without much consultation with Labour Members.
	The rebate was negotiated wisely by Mrs. Thatcher, because it addressed some of the problems that the structures and financing of the European Union placed on this country unfairly and unequally. However, it was wrong to give up any part of that rebate, and in particular to do so without concessions in the negotiations in return. One should not just make generous impulsive offers and throw all one's cards on the table
	Europe is a matter of continuous negotiation, albeit a rather annoying and embittering one. In the negotiation, one must play one's cards and games in return for sacrifices. My concern is that there were no reciprocal gains and we got nothing in the negotiations, either on the treaty, which was also in play and being negotiated at the same time, or on the budget situation that has been so damaging to this country. Before those concessions, our contributions, which will increase under this Bill, were between 7 billion and 8 billion gross over the past few years.

David Taylor: The previous Prime Minister, when negotiating rebate reform, stated that European partners had arrived at a quid pro quo in respect of CAP reform. Just weeks later, the then President Chirac said to French farmers that the CAP was safe and unchangeable until 2020. Does my hon. Friend think that that quid pro quo is likely to be delivered any time soon?

Austin Mitchell: The so-called concession on the CAP was not worth the paper that it was not written on. Our experience of the CAP indicates the difficulty. The new settlement will be in 2013, but I do not imagine that we shall get any substantial concessions from the French. Indeed, this reminds me very much of the Berlin negotiations on Agenda 2000, when some concessions had been made on the CAP but then in marched President Chirac who cancelled the whole lot and took them back. This issue has been impossible to address. Every party in this country has promised at every election a fundamental reform of the CAP, but we have not got one.
	My hon. Friend the Member for Grantham and Stamford said that the negotiations have set the CAP expenditure on a remorseless downward path, but that is nonsense. It has been reducing as a proportion, but it has been increasing as a total, and it still represents well over half the annual EU budget going to 5 per cent. of the EU electorate. That goes to show what the EU's preoccupations are, so he was wrong to say that there has been a concession.

David Taylor: I am not even sure that the trend is downwards. The overall proportion of allocated expenditure that the CAP took in 2006 was 46.7 per cent and in 2005 it was 46.2 per cent. It is floating up slightly, not floating down as my hon. Friendperhaps inadvertentlysuggested.

Austin Mitchell: My hon. Friend is a fount of wisdom and sagacity, and I am always delighted to be corrected on any issue that is damaging to the European Union. So the trend is up for the proportion now, although it had been heading down for some time. Anyway, the CAP is very boring and I want to move on

Stewart Hosie: The hon. Gentleman mentions the CAP. There is no question but that it needs reform and we all have our own issues with it, but at 0.4 per cent.less than half a per cent.it has provided secure food supplies for decades in Europe. It has also, to some extent, been a social tool to protect the most fragile economies in some of the most remote and rural areas. We all want to see changes in the subsidies for big agro-business, but what other changes would the hon. Gentleman make that might weaken or damage the good things that the CAP has delivered for many decades for a small proportion of Europe's income?

Austin Mitchell: I do not want to make changes: I just want to scrap it. That would be the sensible thing to do, because then we could support our own agriculture in our own way. That is enough for now on the CAP, but the key point is that it is a massive budgetary contribution to a small section of the European economy.
	Before the changes proposed in this Bill, our gross contribution to Europe over the past few years was between 7 billion and 8 billion a year, and our net receiptthe money that the EU graciously gives us backwas between 3 billion and 4 billion a year. That is our money with their costs deducted to spend on purposes that they see fit. It annoys me, as it does my hon. Friend the Member for Luton, North, to see on every dogs' home or retirement home for eurocrats the sign with the stars saying that it was built with European money. It was not built with European money, because it is our money that we have been given back, with their costs deducted. We could spend all that money for our own purposes much more effectivelyand certainly not on the CAP.

Angus MacNeil: In some ways, I agree with the hon. Gentleman. Indeed, if one looks further northlatitude may have something to do with itNorway and Iceland spend more money per capita supporting their own agriculture to ensure a secure food supply than do EU members. A secure food supply is not dependent on the existence of the CAP.

Austin Mitchell: Yes, and I am grateful to the hon. Gentleman for making that point.
	The Bill will increase our gross contribution to 10 billionwhich will rise to some 20 billion after 2013and the net receipt to 6 billion. I ask those hon. Members who say what a benefit the system is to the rest of Europe to envisage how many roads, schools, hospitals and health centres could be built here, at our discretion and for our purposes, if we were not making that annual contribution. We are told to rejoice that Italy and France are now beginning to pay something after all the years of paying nothing, but the proportionate increase in their contribution is less than in ours, and we have been making the second highest contribution.
	Our Government's contribution is about 0.5 per cent. of our GDP, and that is important, because that is the growth from which the people of this country benefit, but it is not our only contribution to Europe. We also make contributions to European institutions of 1.8 billion in total, including for instance the blessings of the Galileo project, which is to send 20 flying pigs into space to bounce back a location system that we get free from the Americans at the moment, so that our motorists and defence forces can pay for it. I come back to the CAPI am sure that the hon. Member for Dundee, East (Stewart Hosie) will rejoice. The net cost of the CAP to us, by the OECD's estimate, is 15 billion a year. That is partly in distortions to the market, but it is also the cost of not buying the cheaper food that is available on world markets, and being forced to buy the overpriced production from Europe. What could we do with that 15 billion?
	Then there is the cost of the European regulations that are showered on us, some necessary and some not. Estimates vary and some are higher than others, but let us say 25 billion a year. Add that lot up and we are contributing between 45 billion and 60 billion a year to belong to that institution. It is some 2 per cent. of GDP, so in other words our growth would have been 2 per cent. faster each year had we not been making those contributions. That growth is cumulative, so at the end of 10 years our economy would have been that much more powerfuland that much better able to contribute to the needs of developing countries.
	Cumulative growth has been lost, and that is a burden that has been assumed without asking the British people, and it is also a loss across the exchanges. We are in a substantial and growing balance of payments deficit, and we are adding to that by the flow across the exchanges. We have already suffered damage to manufacturing in this country. When we joined, we had a surplus in manufacturing trade with Europe. Now we have a steadily growing annual deficit. We have paid for that in previous years through a surplus with the rest of the world, but that has now gone, too. There is a massive drain on the balance of payments, which will only get worse if we carry on this course.
	Where has all that money gone? Where does the 45 billion to 60 billion go? My right hon. Friend the Member for Rotherham (Mr. MacShane), who is working hard for his European knighthood or whatever will come at the end of his long travails, said that it was going to help the Poles. Well, that is a wonderful purpose, and I am glad to help the Poles. I do not mind them: in fact, I quite like them coming here to help us, because our contribution does not keep them there. But what right has my right hon. Friend, or any other of my right hon. and hon. Friends, to be so generous with our money for those purposes?
	Where has the money gone? It cannot all have gone to pay Mrs. Cresson's dentist the massive sums that he was receiving for advising in her office. It cannot all have gone on corruption, which adds 10 per cent. to so many budgetsall of them unqualified. My new hon. Friend the Member for Grantham and Stamford was quite wrong to say that it was not the Commission's spending, because it is the programmes that the corruption occurs in, and Europe is responsible for those programmes. Is the money going to the Spanish, to build fishing vessels to come and catch our fish and take it off to Spain? Is it going to farmers in the Republic of Ireland and France? I am sure that they do better out of the CAP and the aid than do the Poles, who are the poorest in Europe. Where is our money going and what benefit do we get from it?

Daniel Kawczynski: The hon. Gentleman makes an important point about the amount of money that will flow out of our country to eastern Europe. Is he aware that the debts of some countries in eastern Europe, such as Poland, are nothing like the national debt of this country, which is more than 700 billion and rising? So it is nonsensical for our British taxpayers to give Poland money when our national debt is increasing at a much faster rate than its is.

Austin Mitchell: If I accepted that specious point I should be criticising my leader and I would never ever do that. Let us say that there is a contribution across the exchanges rather than an assessment of the budgetary position.
	What benefits do we get? There is a mantra. The Government and Euro-enthusiasts always tell us that inestimable benefits flow from Europe. They say inestimable, as a reason for not estimating them. Year after year I have tabled questions asking for a balance sheet of the gains and losses of our membership of the EU. Lord Pearson, who represents the provisional wing of the UK Independence party in the House of Lords, tables an annual motion asking for a balance sheet, but we are never told what the benefits are.
	We are told that many jobs are dependent on Europe. That is just not true; those jobs would exist whether we were in the EU or out of it. Exports and trade would continue.

Angus MacNeil: It is argued that one of the benefits of EU membership involves fiscal transfers. Does the hon. Gentleman agree that there may also be many inestimable benefits to the European economic area, witness Iceland, Norway and Switzerland?

Austin Mitchell: The countries that have done best economically are outside the European Union, especially smaller countries such as Switzerland and Iceland. They do not have to bear the EU's burdens, so they have had much faster growth than us. EU growth has been laggard.
	What benefits do we get? We certainly cannot claim the common fisheries policy as a benefit. No one would defend that. Nobody seems to claim the CAP as a benefit, apart perhaps from the hon. Member for Dundee, East who said it brought stability, but it brings stability at enormous cost and distorts our market.
	Nobody would say that the other common policyforeign and defence policyhas achieved much. How successful was it in Yugoslavia? It was largely responsible for breaking up Yugoslavia. The EU was pushed into intervention in Kosovo by President Clinton. Look how united and solid the EU was on Iraq, where it fell into squabbling camps. In Afghanistan, we are being left to bear the brunt of the fighting and death while German troops have to clock off for tea at 5. Again the burdens fall on us.
	As my hon. Friend the Member for Luton, North said, there have been two surveys of the costs and benefits. The Swiss drew up an honest balance sheet for their Department of Foreign Affairs. It indicated that the burdens of Europe would take 1 per cent. from their annual growth. A French think-tankpro-Governmentobviously influenced Sarkozy, who wants the European Bank to lower the exchange rate and interest rates to make the euro more competitive. The French survey showed that economic and monetary union has damaged growth and turned Europe into the high-unemployment, low-growth blackspot of the advanced world. There have been glimmerings of growth in GermanyI am sure my new hon. Friend the Member for Grantham and Stamford would intervene at this pointbut the EU is growing far slower than any other part of the world.

David Drew: Recently there has been a softening of attitudes towards the euro, especially by the UK media. The euro has appreciated against the dollar and that could be seen as a sign of success, but in many respects it has become even more restricted as a currency, which presents even greater dangers were we ever to join it. Does my hon. Friend agree?

Austin Mitchell: I am grateful that we did not join the euro. Our present Prime Minister kept us out. The euro is going up as the dollar comes down. People are coming out of dollar stocks and there is a policy of benign neglect of the dollar, which improves the US exporting economy because it is picking up as domestic consumer demand falls, but European manufacturing will suffer. The problem for us is where we should be in that equation. My view is that we should try to reduce the exchange rate through lower interest rates, although I do not want to go into that.
	I want to know what benefits we are getting from the contribution enshrined in the Bill. Euro-enthusiasm has in some respects replaced socialism as a credo on the Labour Benches. The Liberals believe in My Europe, right or wrong, or perhaps My Europe mainly right, very occasionally wrong but we don't talk about it. However, the wealth of nations is built by hard-headed realism, not by impulsive romantic gestures, not by naivety and certainly not by being the slave of a dead ideologyKeynes' critiquerepeating a pointless mantra about the inestimable benefits of EU membership.
	We have to be realistic and hard-headed. The reality is that we would be better off out, sloughing off the burdens of Europe, trading with the wider world and co-operating with the nations with which we share problems rather than achieving that co-operation by financing a huge superstructure of marble palaces in Brussels, a play-away Parliament, a massive bureaucracy and all the failed programmes that go with it. That is the reality.

Angus MacNeil: Will the hon. Gentleman give way?

Austin Mitchell: No, I am grinding slowly to a halt. It is a painful process for the House that I do not particularly want to interrupt.
	Reality is not mindlessly handing over money to every demand or mindlessly saying that we benefit from an institution that is in fact doing us harm, and which is constructing over our heads a state that will be set above our own nation state. We need an honest, objective measurement of the benefits and debits of membershipI hope we shall be given it by our Government. That would be a sensible basis for making a decision about our relationship with Europe. The decision may take the Euro-enthusiast direction that my new hon. Friend the Member for Grantham and Stamford and my old friend, the right hon. Member for Rotherham, want, but it may not. People may ask, Why should we spend all this money? Why should we donate all this money and suffer disadvantages and losses? Why shouldn't we build up our economic strength and decide our economic destiny?
	Let us see the balance sheet; then we can decide whether we are prepared to pay. Naivety is interesting and usefulperhaps necessaryin courtship, but it is no basis for a long marriage.

John Redwood: In 1984, as a young man, I was the chief policy adviser to the then Prime Minister. One of my proudest moments in that job was when she returned from a difficult negotiation in the European Community where, thanks entirely to her skill, determination and perseverance, she obtained for the UK a most important reduction in the amount that we had to pay into the European Economic Community.
	It was a great negotiation because to achieve that rebate, that lady had to persuade all the other member states to her point of view. She could not block the payments that we were making because a Labour Government had agreed them. She knew they were far too high, and it was her consummate skill as a negotiator and politician that slowly persuaded all the other member states, reluctantly and gradually, to the view that Britain was getting an extremely raw deal; it was paying far too much, and justice required that more of the money should be left in the United Kingdom.
	As a result, the Government whom she led and those led by her two successors were able to spend more money on British public services chosen freely by the elected representativesthe majority party in this Houseor to return more money to the British people to spend on their own families and businesses through tax reduction, which I greatly welcomed. That makes tonight particularly tragic, because a subsequent Prime Minister, Mr. Blair, went to a European negotiation at which all he had to do was say no. He need not have given any of that money away. He did not need any of the skills that Baroness Thatcher required to win us the rebatehe had all the cards in his hand. He merely had to say no unless and until the other members of the European Union saw the justice of the case that he was making.
	When the former Prime Minister moved his position, from the excellent one that there was no need to give up the rebate and that it was not negotiable, to the position that it was negotiable, I and many of my right hon. and hon. Friends had misgivings. The Opposition were prepared to listen, however, and see whether it was feasible to negotiate a much better deal on the spending side of the account, whereby the British position would not worsen, while that of all members of the Union would improve if spending could be reduced on agriculture. Such spending gets in the way of efficient agriculture in many member states and prevents developing countries from getting fair access to our markets.
	Some of my right hon. and hon. Friends withheld their criticism to wait and see whether the then Prime Minister had some negotiating skills. It beggars belief that he had absolutely no negotiating skills at all. Armed with the veto, he threw it away. Armed with a strong case to win over the new member states and the Nordic member states to the proposition that the common agricultural policy was bad and should be reformed, he was unable to persuade any of them. Tonight, we have a House of Commons with Labour Members almost in denial and about to vote through a disaster for the United Kingdom in the form of an extremely large bill that we cannot afford and do not want.
	The Chief Secretary to the Treasury, who opened the debate, showed bravado and obviously implied that he thinks everyone in the country is a fool. He tried to present the Bill as some kind of negotiating success and a way of increasing the rebate. Yes, of course it increases the rebate, because it increases the spending by so much more. It means that Britain will end up paying far more in the seven years of the proposal than if nothing had been given away in the negotiations.
	I notice that the Economic Secretary to the Treasury, who is on the Treasury Bench, has no intention of intervening, because she knows that I am absolutely right about the huge expense. The documents reveal costings of 7.4 billion at the current euro-sterling exchange rate. Given the parlous state of the national accounts, we know that every penny of that 7.4 billion will have to be borrowed. If it were borrowed over, say, a 20-year period at 5 per cent.the Government might be able to do thatthere would be another 7.4 billion of interest on top of the 7.4 billion of capital that will need to be paid and then repaid over the 20 years of the debt. I leave out the interest on the interest, which would add to the sum even more. On the Government's own admission in the explanatory notes to the Billthey are riddled with errors, of course, but I do not think that this figure is an errorthe minimum cost to the state and the taxpayer will be 7.5 billion, which, in practice, will mean 15 billion or more, because they will have to borrow it and we will have to pay interest on it.
	If we look beneath the Government's guidance, we see that the true bill to the taxpayer and the British Government will be far bigger. This Government have signed up to a set of spending plans that mean that, on average, every year over the seven-year period the United Kingdom will have to pay 10 billion into the European Union, after knocking off the smaller rebate, which is still in place thanks to Baroness Thatcher. That means that, in practice, there will be an underlying spending increase of 70 billion over a seven-year period. Using my simple sum, if the Government borrowed that over 20 years at 5 per cent., we are talking about 140 billion of first-round interest payments and capital repayments, just to see us through the seven years. At the end of the seven years, of course, we know that we would be on another escalator, because our bargaining position would be greatly weakened thanks to the Government's foolishness in giving away this most important principle and allowing the rebate to be weakened.
	We know that the present Government are careless with public money. They say that any Conservative plan to spend a few hundred million or the odd billion on a tax cut would produce a black hole, yet along comes a mortgage bank in trouble and they can suddenly find 24 billion without batting an eyelid. Now we discover that they can apparently pledge this country to pay 70 billion over the cycle of the budget proposal. We know that they can propose that only because they intend to borrow every penny of it, just as presumably they are borrowing every penny of the 24 billion that they have so far made available to Northern Rock.
	The Chief Secretary to the Treasury produced several arguments, in the course of a long and rambling speech, for why the budget was a good deal for Britain. There was the strange argument that the rebate was going to increase, whereas we all know that there will be a worsening of the rebate and increased spending. There was then the argument that we should be extremely grateful and welcoming of the fact that, as a result of our much bigger contribution to the European Union kitty, there would be more spending in countries outside the United Kingdom. He implied that he believes that, as soon as a country gets European Union spending, it becomes more prosperous and its growth rate rises. That is a curious argument.
	During my time in politics in Britain, I have seen some parts of the United Kingdom receive European Union money. We know that they have been receiving it because, as has been pointed out in the debate, one condition of it is that recipients have to stick the 12-star flag logo all over the sign boards for the projects, whereas I believe that under British law they are not allowed to put a Union flag on anything that we fund directly. Somebody rightly pointed out that the money is ours anyway, because we put more in than we get back. We know that some places have been getting that funding.
	If we look, as I have, at the income levels and growth rates in the places that receive that funding, we see two interesting things. First, the poorest parts of the country receive the money. That is not surprising, as the main condition for getting it is that they start as the poorest parts of the country. The other thing that we discover is that, under this Government in the past decade, those areas have also had the slowest growth rates. The money is clearly not kick-starting those parts of the country into greater prosperity; it is part of the problem that is holding them down.

Julia Goldsworthy: indicated dissent.

John Redwood: I see the hon. Member for Falmouth and Camborne (Julia Goldsworthy), a Cornish seat, becoming agitated, but she must know that the Cornish rate of growth has been much less than that of London or the south-east. London and the south-east are not main recipients of European aid, whereas Cornwall is. If receiving subsidy and aid triggered a big increase in the growth rate, one would expect Scotland to have been the fastest growing part of the United Kingdom in the past decade, as it has had so much extra money from all sources. Instead, we discover that Scotland has been about the slowest growing part of the United Kingdom.

Julia Goldsworthy: The right hon. Gentleman is correct that there is still a large gap between Cornwall and the rest of the country, not only in GDP per head of population but in income. However, the rate of growth is now faster than the England average.

John Redwood: Growth rates in London and the south-east are far greater than that in Cornwall, which demonstrates that European Union money is not managing to do what the hon. Lady hopes. I should be delighted if that money were well spent, but one of the big problems with European Union money is that under the rules, it must be put into schemes that it would otherwise not have been put intoby definition, marginal schemes or even those that are not thought very worth while.

Angus MacNeil: Could not the argument be made that the issue is not actually about subsidies at all? The rate of growth in the Republic of Ireland, for example, has been double that in the United Kingdom. That has happened because Ireland left the United Kingdom and set its own tax structure to suit itself. Perhaps that is not happening in Scotland because Scotland is not independent so that it can compete, match and beat the Republic of Ireland.

John Redwood: This is not a debate about Scottish independence, but I agree that cutting the tax rate is a very good way to accelerate the growth rate. The Chief Secretary to the Treasury seemed to think that subsidies to the Irish agricultural sector were the main cause of accelerated Irish growth. There is no evidence from the Irish economy that the agriculture sector has led the growth; it has been led by the service and manufacturing sectors. That is definitely the result of very low corporation tax.

William Cash: On the Irish economy, my right hon. Friend might not have been here when I made the point that there is an excellent book by Mr. Roy Foster called Luck and the Irish demonstrating that the money put in by the European Union has been less effective in increasing Ireland's prosperity than American money and tax reductions.

John Redwood: I am grateful for my hon. Friend's endorsement of my case. So much European money went into the agriculture sector in Ireland, but that is not the great success story. The success story is in those sectors that have attracted large sums of foreign capital to create new businesses, which in turn have attracted a lot of talented Irish people back to Ireland to discover that it is a place where they can have very good careers.

Angus MacNeil: Some economists argue that the agriculture subsidies not only did not help the Irish economy but hindered it in some ways, because resources were allocated to a less productive sector of the economy than they might have been.

John Redwood: Again, the hon. Gentleman makes a helpful and sensible intervention. I hope that Ministers are listening; they might learn from it.
	To return to my argument, all too often the projects financed by the European Union are marginal, or, in economists' terms, sub-optimalnot those that one would choose for oneself. That is the role of the scheme. As the sage from Great Grimsby was saying a few minutes ago, would it not be much better if in some cases we could choose the projects ourselves and spend our own money on them without the middlemanwithout having to send the cheque to Brussels and then get some of it back after jumping through various hoops to prove that the project is one with which we would not otherwise have gone ahead? It is a rather crazy way to spend money.

Julia Goldsworthy: Does the right hon. Gentleman think that there is a benefit to investing in high-risk projects? Those projects often give the opportunity for the greatest returns, although they might not be viable in their own right or have the resources to take on that risk themselves.

John Redwood: The hon. Lady should read a history of the 1970s, when we had a Government who thought that backing winners was a good idea, and every one turned out to be a flop or a loser. Maybe we are returning to that in the Government's latest approach to choosing investment projects and dealing with European Union funding. One begins to worry.
	The Chief Secretary's next argument was that this had not all been in vain. Although perhaps in his more honest moments he accepts that we are talking about a very big billat least 7.5 billion and maybe 70 billionhe said, Ah, but there will definitely be agricultural reform. That has already been revealed as a curious opinion given the attitude of the French, who will be in the chair of the European Union when the so-called review occurs. The language of the European Union has already downgraded the review, and the French have made it clear that they do not wish major reforms of the common agricultural policy to occur under their chairmanship. We come back to the question of how to negotiate. I always thought that when negotiating, if one is minded to make a concession in order to gain a concession from the other side, one makes sure not to make one's concession until the other side makes theirs. That is what good negotiating is about. It is quite extraordinary to make a massive concession for 2007, and then say that in five or six years' time, somebody might discuss making a concession the other way. Why on earth should they give us anything when we have negotiated in such a stupid way?

Oliver Heald: Does my right hon. Friend agree that the French position is that the major reform of agriculture has already taken place? Further negotiation is not even a glimmer in their eye.

John Redwood: My hon. Friend makes a powerful point. As others have revealed in this debate, it is not even clear that the proportion spent on agriculture is falling, although it is certainly clear that the amount spent on agriculture continues to rise. That is the French agenda, which has a lot of supporters in the European Union. I do not believe that the Government have a majority in Europe to support a significant change, and they certainly do not have unanimity on fundamental change, which is what they require.
	Even worse, we know that quite a bit of the 70 billion that we have been asked to contribute will be spent on programmes to which the auditors will not be able to give a clean bill of health. Extraordinarily, the hon. Member for Grantham and Stamford (Mr. Davies) has told us that that does not count, because such fraud, malpractice or misspending occurs in member states rather than as a direct result of European Commission action. However, all that money is spent under European Union rules.

Angus MacNeil: I am grateful to the right hon. Gentleman for giving way again; he has been very kind. To control misspending, does he agree that there should be a cap on the amount that certain individuals receive, which would mean that people such as the Duke of Westminster, who is a very wealthy landowner, would not receive obscene amounts from the CAP?

John Redwood: I do not want to personalise the debate in that rather unsophisticated way. However, I make common cause with the hon. Gentleman in saying that too much money is spent through the CAP. The CAP should be reformed and that money should be repatriated. Too much money is also spent through a lot of other programmes. As the auditors have revealed, regardless of who technically spends the money, it is spent on European programmes, and all too often it is spent wastefully or even fraudulently, which should be a grave concern to us all.
	I cannot say to the people of Wokingham, I voted tonight to make sure that you will pay more tax in order to spend another 70 billion over the next EU budgetary period, and some of that money will be wasted, frittered or even spent fraudulently. As someone who looks at the auditor's reports from time to time, I cannot satisfy myself that that money will be well spent from now on and that we should relax. The money would be more likely to be well spent with proper investigation and control if it were spent closer to the people who paid the tax, rather than if it were to go through the intermediation of a remote and bureaucratic system of government on the continent before coming back here or to other member states to be spent by officials.
	One of the myths of the EU is that it has a small and very effective bureaucracy. By remote control, the EU employs hundreds of thousands of bureaucrats throughout EU member states. Those bureaucrats might as well work for the EU, because they are doing the EU's biddingI am glad that that is not the case, because they would be asked to do even more things with which many of my hon. Friends and I undoubtedly disagree.
	I urge all sensible Labour MPs to vote against the Bill tonight. Those who vote for it will vote for more British taxpayers' money to be spent in faraway places, sometimes on fraudulent, incompetent or badly run schemes. They will vote for this country to borrow yet more money, which it cannot afford, and to pay yet more interest. They will vote for a further deterioration in the way in which this country's budgets are run by this Government. They will vote for the results of a negotiation that was so maladroit that our previous Prime Minister gave away a wonderful set of opportunities that another Prime Minister had negotiated for us without getting anything in return.
	This is an extremely sad day for the United Kingdom. It is a sad day for this Parliament, and it is a day that Ministers will come to rue. Ministers should understand that they are in a big borrowing hole. They have the black hole of Northern Rock, and they have the black hole of this Bill. Labour Members will find that there is less public spending for their constituencies, and Conservative Members will find that there are fewer opportunities to cut the burden of tax on the British people so that we can prosper more.

Ian Davidson: We surrender; now let us negotiate. That seems to have been the Government's stance when they went to Brussels. Throughout the discussionsduring the original negotiations, subsequently and again todayan entirely false dichotomy has been posed. We supposedly have either to accept anything at all that the European Union proposes, or to leave the EU, which would result in the collapse of civilisation as we know it. Those are not the alternatives [Interruption.] I am glad to see the Chief Secretary nodding in agreement.
	Remember that exactly the same position was put forward when joining the euro was mooted. For a period, people said that if we did not join, the economy would collapse: 10 zillion jobs were going to go, and there would be a wasteland from John O'Groats to Land's End. Well, we did not join the euro, and lo and behold, the economy has gone from strength to strength, thanks not only to the brilliance of the former Chancellor, who is now the Prime Minister, but to the correctness of that decision.
	Nowadays, not only can I not find anybody in favour of Britain joining the euro, but I find it almost impossible to find anybody who was ever in favour of itsuch has been the process of re-education.

Kitty Ussher: indicated dissent.

Ian Davidson: I see the Economic Secretary to the Treasury shaking her head; I presume that she is still one of the true believers, as befits somebody who used to be the chief economist for Britain in Europehardly an impartial organisation on such matters.
	It would be right for us to reject the proposals and for the Government to stand up for British interests. The budget negotiations were meant to rely on real reform as a quid pro quo for additional payments from the United Kingdom, but it is absolutely clear that there has been no real reform in the EU budget as a result of our conceding a substantial chunk of our rebate.
	The Prime Minister and I completely agree on the need to repatriate to the United Kingdom expenditure on structural funds. As has been said, no value whatever is added by the process of passing money to Brussels, handling fees being taken off, and some of the money coming back to us for projects in this country. All that involves is a transfer of political power to Brussels, which allows politicians there to make decisions about which projects should be supported and which should not, and under which rules. Such issues would be far better handled in this country. It would be much better to dispense with the system whereby Brussels handles the structural funding throughout the European Union, and I shall come in a moment to how I think that ought to be done.
	I have similar thoughts about the common agricultural policy in the UK. As far as I can see, for a long time there have been very few reforms in the CAP. As has been said, the policy basically operates as a wealth transfer system, whereby poor consumers pay more for their food so that wealthy farmers can benefit. It is an obscenity that, as has been mentioned, people such as the Duke of Westminster receive enormous sums from the CAP, and will continue to do so under this scheme. Under the proposals, the undeserving rich will continue to get richer from the CAP and that financial system.
	It is completely false to suggest that I, or many of my hon. Friends who intend to vote against this budget, oppose aid for eastern Europe. I have been in favour of widening the EU for a long time, so that is a calumny that we should in no way be prepared to accept. However, it is not helpful to handle the money that we wish to give to eastern Europe as it is currently being handled. In our relationship with eastern Europe, we should adopt two models from the Department for International Development. First, where we have little confidence in the internal systems of the country involved, we should be prepared to say, Yes, we're willing to support this project, but we'll handle it. We'll seek your help and assistance, but we will not hand the money over to the local equivalent of the Mafia, so that they can take away a huge proportion of it instead of making sure that those who deserve it receive it.
	The second method is direct budget support. Where we have confidence in the Governments of the recipient countries, it is far better to give them aid in their budgets, as we do with many African countries that have met various good governance standards, so that they, rather than some bureaucrat in Brussels, can determine how that money should be spent. It has always seemed absurd to assume that the European Union and its bureaucrats sitting in Brussels know better what is needed in Latvia, Lithuania and other parts of eastern Europe than the people in those countries do. If we support devolution in this country, we should support devolution in the form of direct budget support across the whole of Europe.
	Let me turn to some concerns about the detail of the system that the Government have not yet touched on. Does the Minister accept that the Government have, as they confirmed in a written answer, agreed to a last-minute 1 billion increase in the administration budget merely to ease the passage of the proposals in Brussels? Why did we concede an extra 1 billion in sweeteners? That is log-rolling, and I can see no reason why we did it, or why we expect the British public to pay our share of it.
	Following the agreement in December 2005, we were told, That's itenough is enough. This is the agreement and this is what we are going to stick to. Yet two months later the Government agreed to an increase in the European budget of 2.7 billion. Why was that? It seems to display a certain inability to strike even a bad deal and then stick to it. Saying, We surrender, but if you're not happy with that, we'll surrender again later on, is not the best way of dealing with these matters.
	We have been told that the Government are very keen on transferring money to eastern Europe. However, we should be absolutely clear that it remains the position that Ireland and Belgium will be net recipients from the budget, as are Luxembourg and several other wealthy countries, whereas a country such as Cyprus, with a gross domestic product half that size, will end up as a net contributor. That is absurd. Per head, the top three recipients of EU funds will be old member statesLuxembourg, Belgium and Greece. That does not display a transfer of wealth from the EU's old western members to its new eastern members. France will be the largest single recipient of money from the EU under the negotiated settlement, which is meant to be about transferring money to the east.
	I fail to understand how the Government can possibly defend this as a good deal. If this is good deal, I dread to think what a bad deal would have been. It is noticeable that the Government have refused to produce statistics indicating their estimates of how much every other country in the EU will pay in and receiveexcept for France. If they are prepared to do it for France, I cannot see why they are unwilling to do it for other countries, unless they feel that there is something to be ashamed of.
	I mentioned that Luxembourg will get the most in EU spending per person, followed by Belgium and Greece, and I would be grateful if the Minister would justify that to me. This does not strike me as being a reform budget. Spain was previously the largest recipient of funds, but it has been replaced by France, and that transformation does not seem to be a brilliant piece of negotiating. Ireland is the second richest country in the EU, with an income per head 30 per cent. above average, yet it will get more money out of the budget than it puts in. I do not understand the logic of that position.
	In fact, the CAP currently transfers money from the poorest states to richer countries such as France and Spain. I am happy to give way on this point if the Minister wants to intervene, but in 2004 the 10 new member states paid nearly 1 billion more into the CAP than they got out of it. Perhaps that situation will change over time, but how did we get into that position?
	Why are we prepared to accept that the EU's administration costs alone will rise by 28 per cent. in real terms? At a time when we are trying to squeeze budgetary expenditure and administrative costs, why are we prepared to accept that EU administration costs will go up by 28 per cent.? Is that another brilliant example of hard negotiation?

John Redwood: The hon. Gentleman is making an excellent speech. Did he know that Luxembourg and Belgiumtwo of the richest countries in the Unionwill get the most spending per head?

Ian Davidson: Indeed, I had already touched on that. Why are we giving more money to Belgium and Luxembourg? If more money has to go on administration, we in this country have a policy of trying to disperse jobs from the rich centre to the poorer periphery. Why is that policy not being adopted by the European Union? That seems an absurdity to me.
	I am aware that the cuts in our rebate are going to be end-loadedcompressed into the last year of the seven-year budget. We are not giving up the rebate completely in 2007-08. We give up 20 per cent. in 2009, 70 per cent. in 2010, and we have agreed to give up 100 per cent. of the funds between 2011 and 2013. Why has that process been end-loaded? Presumably they saw us coming, and it is now much more difficult for us to negotiate our way back. We have a far more disadvantageous deal than we would if the rebate were evenly given up over the period in question. At the end, we would end up with a better figure from which to work. I remember from when I was negotiating that if we could manage to get a deal that gave us a certain percentage over a year, but it was end-loaded, we started off in a much better position in the subsequent year. I can only assume that those elementary lessons in negotiating had not been passed on to the British negotiators, and I can only assume that the European Union saw us coming, and decided that taking sweets off children was quite an enjoyable processbut I will not digress.
	The difficulties caused by our failure in the negotiations spill over into other areas of interest for the British Government. We have an excellent record in the area of foreign aid. We have worked exceptionally hard, but we ought to be exceedingly concerned about the way in which our commitments to retain CAP spending have locked us into negotiating positions, in the Doha round and so on, that make world trade talks more difficult than they otherwise would have been. The agreement places us in a position that is directly against the interests of the third world in world trade talks. I can see why the French wanted to put us in that position, but I cannot understand why we were willing to accept it. We must do better subsequently.

David Drew: I absolutely agree with that point. My worry is about the current economic partnership agreements, which seem entirely driven by Brussels so as to set the terms against the third world, yet are sold on the basis of fairness and justice. Surely they are the opposite.

Ian Davidson: Indeed they are. Not only are we trying to break the third world by forcing economic partnership agreements on it, we are trying to trap it into a world trade system that was established in the interests of French farmers and the Duke of Westminster. That is an absurd position for a Labour Government to accept for one moment.
	I am afraid that I have not been here for the whole debate, because I had other commitments. I therefore apologise if other hon. Members have mentioned the European Parliament and the monthly travelling circus, when its accoutrements, Members, committees and staff are transferred from Brussels to Strasbourg and then back again. That will go on under the budget. The issue has not been tackled, and was not even broached. If we vote for the Bill, we are voting to condone that enormous waste of expenditure on a regular and never-ending basis. That seems absurd.

Angus MacNeil: Is not the monthly transfer all the more absurd these days, when people are so concerned about their carbon footprints?

Madam Deputy Speaker: Order. I do not want this debate to stray into carbon footprints.

Ian Davidson: I certainly do not want to stray into carbon footprints either. The hon. Gentleman is entirely correct, but we will move on from there.
	We have to see the budget in the context of where the European Union is going. It will be the financial package for the implementation of the rebadged EU constitution, providing ever more centralisation, with money again being unnecessarily sucked into the centre to be spent from the centre. There is absolutely no evidence in the budget of any enthusiasm for subsidiarity, either.
	We have heard from the Foreign Secretary that he envisages the European Union expanding into the middle east and north Africa. Presumably with the next set of proposals we will be told that unless we give huge amounts of money to Brussels, we will be against north Africa and the middle east. I have some sympathy for the view that we should expand the common market to those countries in trading terms, in order to help them develop. However, I hope that the Economic Secretary will make it absolutely clear at an early stage that we do not endorse any proposal for the free movement of peoples from north Africa and the middle east, because that is [ Interruption. ] The Economic Secretary looks sceptical at that, but I hope that she will make it absolutely clear that there is nothing in the agreement to take us towards the free movement of peoples from the middle east and north Africa en masse into the European Union in general, and into the United Kingdom in particular.
	It is with some regret that I find myself having to oppose my Government. However, there comes a point when we have to say, This is an appalling agreement and we should never have signed it. Those involved in the negotiations were sucked into accepting the assumption that those who do not accept everything that comes from Brussels are in favour of withdrawal. I do not accept that those are our only two choices and I never have; nor do I accept the suggestion that those who do not accept the budget are against eastern Europe, and I hope that the House will not accept it, either.

Charles Walker: Thank you for calling me to speak at the end of this important debate, Madam Deputy Speaker. I shall try to keep my remarks short. This has been an interesting debate, with some varied contributions. I notice that the Government could only get the right hon. Member for Rotherham (Mr. MacShane) and the hon. Member for Grantham and Stamford (Mr. Davies) to speak in favour of their position. The right hon. Member for Rotherham gave a long andas I said when he was in the Chamberfairly tedious speech, but he did it with a twinkle in his eye. Too often, however, when we have debates about Europe, we start to throw out words such as racist and xenophobic, and that does this place no good at all. It brings the whole political class into disrepute. It is perfectly reasonable to be concerned about this country's relationship, and its future relationship, with Europe without being called a racist or xenophobe. Those terms are thrown around the Chamber far too often, in far too many debates.
	The hon. Member for Grantham and Stamford made an excellent contribution. We on the Opposition Benches are now realising that he is far more use to us on the Government Benches than he ever was on ours. I have to tell the Minister that we are really not going to have the hon. Gentleman back; I know that you want him to come back over here, but he is yours for keeps.
	One of my concerns about the European Union project and the common agricultural policy is the implications that they have for developing countries, particularly in Africa. Farming is fundamental to those countries' development and economic growth, yet we weight agricultural subsidies in favour of our own well-heeled farmers, as the hon. Member for Glasgow, South-West (Mr. Davidson) has just pointed out. We make it difficult for African farmers to bring their produce to our markets, yet we think nothing of taking our excess product that no one here or in Europe wants to buy and dumping it on their markets at massively reduced prices, making it impossible for African farmers to compete. I have used this example before, and I will use it again: there are markets in Nigeria that are selling tinned European tomatoes. That is simply madness, and we in the European Union must put an end to it. It is unsustainable for us to subsidise our farmers off the backs of struggling African farmers. If we are really going to demonstrate that we want to improve the outlook for African countries and to strengthen their economies, we must allow them access to our agricultural markets. We must allow them to compete on an even footing.
	I should like to inject a note of caution. The Minister talked earlier about the environment. Of course, the environment is hugely important; global warming is a huge challenge. We must be very careful, however, that people in the European farming community do not use the environment as yet another reason to deny African farmers access to our markets by talking about the number of air miles involved in the shipment of food. I am sorry, Madam Deputy Speaker. I know that you do not want us to talk about carbon footprints, but foods imported from Africa often have a far smaller carbon footprint, because they are grown in natural sunshine rather than in expensive, heated greenhouses. We must not use the concern about the environment that is shared by our EU partners to block African farmers' access to our markets.
	When we have debates about Europe, we do not do the political class any great favours. We use abstract phrases and high-minded language. Of course, we are very high-minded people, but we must remember that what we do here has to be relevant to a wider audience. I know, from going around my constituency, that there is concern about the European project and about these quite significant additional sums of money that we are going to hand over to the newly joined member states of the European Union. I do not think that my constituents are mean-minded people, however. They understand that there is an argument for helping emerging economies in Europe to get the foothold that they need to become wealthier and to become our trading partners, but they also have a legitimate right to be concerned about the sums of money being talked about. We must not dismiss those concerns as the concerns of racists and xenophobes. After all, any money that we spend in this place belongs to the taxpayer. It belongs to the people whom we represent, and it is therefore incumbent on us to make a strong case for spending it. Ultimately, we should be answerable to them for where their taxes are going.

David Taylor: The hon. Gentleman is probably right in one respect: there is relatively little concern about the unreformed CAP providing net sums to the accession countries. I see little wrong with that. What does concern me is countries such as Austria, France, Ireland, Portugal and Spain, which are all net beneficiaries from the unreformed CAP. That cannot be allowed to continue for much longer, can it? How can that strike constituents in the hon. Gentleman's area or mine as being fair or sane?

Charles Walker: I share many of the hon. Gentleman's concerns, and I will tell him why. My constituency faces significant funding pressures on public services. For example, we face the closure of not one hospital, but possibly two. My constituents are told that there is not enough money to meet and pay off the historic deficits and that that is the reason for the closures. We need to answer those concerns. If we believe in sending money to the emerging economies of eastern Europe, we need to make that argument. I personally believe that this country gives too much to the European budget and that we could do with giving quite a bit less. Again, however, I am happy to argue the case, as we have today, across the Chamber.

Angus MacNeil: If the argument were about giving from the rich to the poor, there might not be so much opposition to it. In this country, we see the money going to rich people such as the Duke of Westminster and several other landed gentry. As some Labour Members have pointed out, countries such as Greece, Spain, Belgium and Luxembourg are achieving most of the gains per capita from the common agricultural policy, so the money is not being transferred from rich to poor at all. If it was, it might not raise so much opposition.

Charles Walker: I take the hon. Gentleman's point. If anything, the EU is too much about agriculture. The EU is obsessed with agriculture and with agricultural subsidies. For the EU to gain the support of the European population, it has to be seen to be working for everyone, but all too often, as he points out, it seems to be working for very few people. Conversely, for far too many people, it amounts to a nice dollop of extra cash on top of what they are already getting.
	I have said before that I love the French rural way of life. I imagine it is rather like the way of life in this country 60 or 70 years ago, but the reason why the French can have farms of 50 and 60 acres, which are economically unviable, is that we in the EUus and othersare subsidising that lifestyle. If France wants to continue with its agricultural marketplace in its current form, that is a matter for France, but it should not be incumbent on us to fund it on its behalf.

Lee Scott: Does my hon. Friend agree that my constituents, like his, are annoyed that the rest of Europe is laughing at us over this matter and at the sums of money we give to countries that are doing far better than we are?

Charles Walker: I accept my hon. Friend's observations. There is and must be a sense of frustration out there among the public. When we talk to our constituents, we find that about 50 or 60 per cent. now question the future direction of the European project. About 60 per cent. of our electorate think that it has gone too far and that it is not in this country's national interest. It is no good Labour Membersor, indeed, some Conservative Members who are more pro-Europe than I ampooh-poohing those people and calling them little Englanders. That is a legitimate concern and we need to listen, understand and act on it.
	I listened carefully to the Minister earlier when he spoke about immigration in the European context. I am delighted that skilled and talented people want to come and work in this country. I really am, but I wish that we had given a little more thought as to how we could have managed that influx of workers to make it better for us and for them. Although I represent a Conservative seat, the south of my constituency includes what I would call a large working-class area: two of the wards are among the 20 per cent. poorest in the country. I understandthis needs to be confirmed later this weekthat in one of my primary schools, English is now the first language of only a minority of students

Madam Deputy Speaker: Order. I wonder whether the hon. Gentleman could confine his remarks to the Bill, which is about financing the annual budget for the EU.

Charles Walker: I will take your lead, Madam Deputy Speaker. All I am saying is that as Europe grows, and as more people come to this country, we need to ensure that we finance not only emerging economies in eastern Europe but our existing economies and infrastructure. If children whose first language is not English are to come into our schools, we need to ensure that we have the infrastructure in place to fund the specialist teachers who will allow them to take advantage of their education. We should ensure that children born in this country, of whatever race, creed or colour

Madam Deputy Speaker: Order. The Bill is about financing the EU budget, so could the hon. Gentleman ensure that his remarks relate to that?

Charles Walker: I shall, of course, take my lead from you, Madam Deputy Speaker, and not from the Chief Secretary to the Treasury, who gave us a wide-ranging exposition of Europe in a long speech that was good in parts and slightly repetitive in others.

Peter Bone: Would it not surprise the general public to know that the budget settlement means that in gross terms we will pay 100 billion in taxes? Could that money not be better used to improve the infrastructure that my hon. Friend has been talking about?

Charles Walker: I have to disagree with my hon. Friend: I do not think that it will surprise the public. I think that they are horrified, to be honest, and very concerned. We are talking about huge sums of money that many people feel could be better spent on existing and new infrastructure in the United Kingdom, for example in east and south-east England.
	If the Government truly believe that there is an appetite in this country for closer integration with Europe and increased spending on Europe, the best way to test the view would be to have a referendum on the treaty. By having the courage to go to the people, we could have a serious argument and debate that would engage not only the political classes in this Chamber but the public

Madam Deputy Speaker: Order. I remind the hon. Gentleman once more that we are discussing the budget for European Communities funding.

Charles Walker: I take your guidance once again, Madam Deputy Speaker.
	We need a much wider debate. The debate that we are having today is among the political classes. Our constituents have a desire to take part in the debate, and we must provide them with the opportunity to do so. We can do that by having a referendum on the treaty.

Nia Griffith: First, Madam Deputy Speaker, I apologise that I was unable to be here at the beginning of the debate. I am privileged to be able to take part.
	Let me put the record straight on Wales. The right hon. Member for Wokingham (Mr. Redwood) seemed to do down all the financial benefits that we have ever had. If everyone had sent money backthat is what he is most remembered for in Walesthat might have been the case, but fortunately we have benefited in many ways. As the hon. Member for Falmouth and Camborne (Julia Goldsworthy) also pointed out, the rate of growth in some of the objective 1 areas has been above the UK average. In Wales, the increase in jobs and recently in exports have both been above the UK average.

Julia Goldsworthy: Does the hon. Lady agree that it is not necessarily appropriate to try to compare the growth of the economy and other factors in rural areas that have a long history of deprivation with the same factors in prosperous areas such as the south-east and London?

Nia Griffith: Absolutely. The comparison was made with London, which has enormous financial institutions of world repute. Clearly, wealth creation in London is disproportionate when compared with the rest of the UK. It is therefore important that we work hard in the peripheral areas.

Angus MacNeil: Does the hon. Lady agree that London has not only all those advantages but a Government who tailor their fiscal policy for south-east England, as well as a currency that is tailored for it? When the Republic of Ireland got outwith that orbit, it showed the benefits of independence. Perhaps that could be recommended for Wales.

Nia Griffith: I must disagree. We have ways in which to disperse funding and we are beginning to make a genuine difference in our peripheral areas through many projects, including the settlements that have been given to the devolved Administrations.
	Clearly, one cannot make up a huge difference in a short time. The comparison with London is therefore unrealistic, but a huge leap forward has been made. We had a difficult coin to toss on convergence funding in Wales. Would our position be so improved that we would not get the convergence funding, or would we continue to be classified as needing it? It was a strange dilemma, because on the one hand we wanted to be poor enough to get the European money, but on the other, we would have liked to celebrate being not so poor as to attract it. However, we were clearly borderline, and we have been lucky because we have made progress, but we have also benefited from another 1.4 billion for Wales.

Ian Davidson: Surely if the Duke of Westminster feels no shame about taking EU money, neither should Wales.

Nia Griffith: Indeed, especially given that we are somewhat poorer than the Duke of Westminster.

Madam Deputy Speaker: Order. We have had more than enough such references to people who are in no position to answer back.

Nia Griffith: Thank you, Madam Deputy Speaker.
	Let us revert to the CAP, which needs reform. That is on the EU agenda, and it throws up anomalies in that some wealthy farmers manage to get even more money. However, it is a tremendous lifeline to many of our small hill farmers in Wales. Many have benefited enormously over the years from EU subsidy, which has enabled them to keep going. Frankly, many would be out of business were it not for that money.
	It is easy to criticise administration and find one example of something going wrong or being misappropriated. However, we must understand that there can be examples of good and bad practice in all government, whether we are considering Brussels, the UK national Government or local government. It is sometimes easy to overlook the significant benefits that we have enjoyed from EU membership, such as opportunities for Japanese electronics companies, for example, to invest in this country and to be part of the market, economy and purchasing power that is Europe. When we consider financial gain, we must therefore take into account more than the single sum of money that is being pushed one way or another in any specific budget.

Peter Bone: When we joined the European Economic Community, 32 per cent. of our exports went to it. Now, only 25 per cent. goes to the EU. How does that constitute economic improvement?

Nia Griffith: We could discuss for ever individual figures and what goes where at any particular time. However, we clearly benefit enormously from being in the EU. We have lost many markets that we had previously. For example, we are not in the same position as we were in the Commonwealth, and we rely much more on our EU partners.
	There has been an anti-French aspect to our debate. Sarkozy is possibly being over-ambitious in his goals for when France has the presidency of the EU. We should not fall into that trap. The power vested in the presidency is not sufficiently significant to push things in the French direction in the way that has perhaps been suggested. It is ironic that Sarkozy has ambitious ideas about defence given that the Assemble Nationale turned down the idea of a European army in the 1950s. He may therefore be overstepping the mark, and we, too, do so if we suggest that his influence will be quite so great when France takes on the presidency.
	Clearly, the issue of enlargement is directly linked to that of budget. Adjustments will have to be made. One cannot simply move from six to 27 states and expect nothing ever to change. Sometimes, we, as one of the richer nations, will have to shoulder part of the burden. We need to be careful to ensure that the debate does not become anti-enlargement or focus negatively on specific countries. Turkey has been mentioned a number of times as a country that is not suitable for EU membership, but for quite the wrong reasons. There are huge concerns, which I share, about Turkey's human rights record, treatment of people in custody, attitude to minority groups, treatment of groups such as the Kurds and policy towards Cyprus. The argument that is often repeated, however, is that if Turkey joins the EU, we will be swamped by people from Turkey seeking economic benefit here. The economic and religious issues seem to drive a lot of the prejudice against Turkey, but neither are relevant. In 10 or 15 years' time, when Turkey joins the European Union, it will be better off than countries such as Bulgaria and Romania.
	I accept that we have differences, but we must go along with the EU and vote the measure through.

David Gauke: It is a great pleasure to wind up today's debate. Those of us who deal with Treasury matters are used to Finance Bills, so a Bill with only one operative clause appears somewhat less daunting.
	The debate has also been a pleasure because of the range of views heard. From Conservative Members, perhaps not surprisingly, we have heard forceful criticism of the deal facing us, and of the consequences that will flow from enacting the Bill. Such contributions were made by my hon. Friends the Members for Altrincham and Sale, West (Mr. Brady), for Shrewsbury and Atcham (Daniel Kawczynski) and for Broxbourne (Mr. Walker) and by my right hon. Friend the Member for Wokingham (Mr. Redwood). We also heard strong speeches making precisely the same point from Labour Members, particularly the hon. Members for Luton, North (Kelvin Hopkins), for Great Grimsby (Mr. Mitchell) and for Glasgow, South-West (Mr. Davidson).
	We have also heard the counter view from the right hon. Member for Rotherham (Mr. MacShane) and the hon. Member for Grantham and Stamford (Mr. Davies). Until the hon. Member for Llanelli (Nia Griffith) spoke, I thought that the hon. Member for Grantham and Stamford was going to be in a somewhat isolated and minority position in his own party on this issueonce againbut it was not to be.
	The simple question dealt with by the Bill is whether the deal obtained by Tony Blair in December 2005 was a good one and in Britain's interests. He went to negotiate with an objective to protect the rebate, to limit EU spending and to reform the CAP. He delivered on none of those. Our gross contributions are up, what we get back is down, and our net contribution is up. Moreover, our negotiating position for the next financing period has been horrendously undermined. The UK will therefore pay the price for this deal not just until 2013 but for the seven years after that. All that has occurred at a time when, as my right hon. Friend the Member for Wokingham made clear, we had a vetowe had an ability to block something that was clearly against our interests, and we failed to do so.
	The argument is made that the deal is all about redistribution from the wealthy west to the poorer east. But let us look at the factsthe comparative data. What do they tell us about the winners and losers from the budget settlement and the own resources decision? The Government will not give us all those figures, but Open Europe has obtained leaked copies of working papers, and there is little link between spending and needs. The highest per capita spending is in the EU's wealthiest country, Luxembourg. In second and third place are two members of the original EU15, Belgium and Greece, not new accession countries. Ireland, one of the richest countries in Europe, will receive more per person than eight of the 10 accession states. To be fair, there is one western country that does do poorly. The country that does worst in terms of funding is the United Kingdom.
	How is it spent, this money that will do so much for the eastern countries? Administration costs are rising by 28 per cent. between 2004 and 2013, to 34 billion. Between 2000-06 and 2007-13, the common agricultural policy budget has risen by 12 per cent. The hon. Member for Glasgow, South-West made a good point about the need to return structural funds to member states, a point also made by the Prime Minister in the past, but that has not happened either: it is another failed negotiating objective.
	The accounts, of course, have been rejected by the Court of Auditors for the last 13 years. I say that fearing that I may aggravate the hon. Member for Grantham and Stamford, who became very worked up about the allegations, saying that this was nothing to do with the Commission. I refer the hon. Gentleman to the European Scrutiny Committee report's summary of the statement of assurance produced by the Court of Auditors. It gave as an example of a reservation
	the incidence of omissions and double or wrong postings
	in the Directorate-General for Education and Culture. It also referred to
	structural measures, internal policies and external action
	and said that
	payments are still materially affected by errors.
	It expressed the view that the Commission and member states needed to make much greater efforts
	to implement adequate supervisory and control systems.
	That applies not just to member states, but to the Commission.

Quentin Davies: Will the hon. Gentleman give way?

David Gauke: I will, but I hope that the hon. Gentleman will not get too excited, as he did during his speech.

Quentin Davies: If the hon. Gentleman simply checks the Court of Auditors' report, he will find that there is no reserve on the Commission's accounts. They have been signed off unconditionally.

David Gauke: I was quoting from the report of the European Scrutiny Committee, which summarised exactly what the Court of Auditors' report had said in criticising the Commission.

Si�n Simon: Will the hon. Gentleman give way?

David Gauke: I want to make a little bit of progress. We are short of time, and the hon. Gentleman has not been present for much of the debate.
	The Government have made a great deal of the fact that we are closing the gap with France. What they have not acknowledged is that the United Kingdom will pay more than 20 per cent. more net per head of population than the French will. We also hear the argument that the rebate will rise, an argument that was advanced by the Chief Secretary. But why will the rebate rise? Again, the hon. Member for Glasgow, South-West summarised it very neatly. Why do we have a rebate? Because we contribute more than we receive, and the rebate reduces the disparity to some extent. The bigger the disparity, the bigger the rebate.
	The deal agreed by Tony Blair in December 2005 means that the disparity will get worse. Overall EU spending in cash terms is going up, but in the UK it is going down. Our net contributions increase, so our rebate increases. That is not a triumph for UK diplomacy; it is because our negotiating objectives were not achieved that the rebate is increasing.
	The other argument that we heard, advanced by Tony Blair when he returned to the House of Commons following the Brussels summit, was that we would see reform of the common agricultural policy. Mr Blair said that President Barroso would begin a review of the EU's budget, including the CAP. He told the House of Commons that this would mean that
	it is then possible for changes to be made to this budget structure in the course of this financing period. [ Official Report, 19 December 2005; Vol. 440, c. 1564.]
	However, when the consultation document for the review was published in December 2006, there was no suggestion that we would see any budget changes by 2013; in fact, quite the contrary. The document stated:
	It will take a long time horizon...to meet the challenges of the decades ahead. It will therefore not propose a new multi-annual financial framework for the period from 2014this task will be for the next Commissionnor the overall size and detailed breakdown of the EU Budget.
	Not only will the review not address the budget structure for this financing period, as Tony Blair promised; it will not address the next one, either, which takes us to 2020. Indeed, the failure to reform the CAP in 2005 will make it harder to reform it in future because, in the course of the next seven years, dependency on the CAP will increase in the accession states, and the desire to reform will be reduced. To repeat a point made by my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady), it was not just the press, the Conservative party or Labour Back Benchers who were critical of this deal, but the then Chancellor and current Prime Minister was also very critical.  The Sunday Times reported how he was quietly fuming. It said:
	It is understood that despite being 3,000 miles away, the chancellor was ready to make himself available to discuss details of the deal.

Si�n Simon: Will the hon. Gentleman give way?

David Gauke: No, I am going to finish. I think we know how that was understood.
	The report continued by stating:
	It is likely that Brown would have insisted on getting more categorical assurances out of the French that they would cut farming subsidies before giving up part of the rebate and agreeing to boost Britain's contributions to the EU.

Si�n Simon: They make that stuff up.

David Gauke: Well, let us not then just take the words of  The Sunday Times; why do we not take the words of the then Economic Secretary to the Treasury, now the Secretary of State for Children, Schools and Familiesand probably next week the Chancellor? He told BBC radio about how the then Chancellor was going to flex his muscles. He said:
	What we will see is Brown the tough negotiator who will stand up for Britain's interests, who's willing to say 'no' when 'no' is the right thing to say.
	He went on to praise Baroness Thatcher:
	There was a phase on the European budget where she stood up for Britain's interests and got a much better, fairer outcome.
	He also said:
	Going to an international meeting, the easiest thing to do is draft a fudge communiqu and go home, but if you want to make change, that's not good enough
	and
	the people who are banging the table and saying 'It's not good enough, we've actually got to do something', they're the change makers.
	So what happened when that tough negotiator and change makerthe Prime Ministerwent to Brussels to claim back some of the rebate? What did he achieve banging the table in order to get a fairer outcome? Nothing. The preparations had been made, the Secretary of State for Children, Schools and Families was urging him on, battle was set to commence, and at the first sign of difficulty the Prime Minister bottled itnot for the last time. The fact is that for all his talk of being a tough defender of Britain's interests in Europe, this is just an excuse for briefing against the previous Prime Minister and now the current Foreign Secretary. He might invite Baroness Thatcher around to No. 10 and he might invoke her name before negotiations, but when it comes to defending British interests he is not fit to pour her tea.
	This Parliament can defend our interests by voting down the Bill. We would save the country 7.4 billion, which is almost 11.5 million for every constituency in the country. Every Member who votes for the Bill tonight should remember that statistic; they might be reminded of it from time to time. Some have said that this is a done deal and that Parliament should not have a say. They are the same people who say that the European reform treaty should be debated fully in Parliament and that the people should not have a say. We are entitled

Si�n Simon: Will the hon. Gentleman give way?

David Gauke: No. We are entitled

Si�n Simon: Will the hon. Gentleman give way?

David Gauke: No. We are entitled to vote this down. Under article 269 of the European Union treaty this deal constitutes a recommendation, which then needs to be adopted by member states. It is a bad deal for Britain: it loses us part of our rebate, it fails to reform the common agricultural policy, and it weakens our negotiating position for the next time. Tonight, we should take the opportunity to reject this recommendation and to defend Britain's interests by voting against the Bill.

Kitty Ussher: We have had an interesting debate in which several Members, not least the hon. Member for South-West Hertfordshire (Mr. Gauke), have shown their true prejudices for all to see. I feel that we have been here before and that no doubt we will be here again. The highlight for me was the contribution of our new friend, my hon. Friend the Member for Grantham and Stamford (Mr. Davies), who gave an excellent speech. Opposition Members said they would not take him back; we are not letting him go as he is able, in a way that no one else is, to speak with inside knowledge about the Conservative party's sheer hypocrisy on European Union matters. He said that the Opposition parties' purpose was to defeat this Bill in order specifically to cause a constitutional crisis in Europe, which is what they want.
	We have heard a lot of facts and figures this evening, so let me start by explaining the true ones. This is a good package for Britain. The abatement is preserved [Interruption.] Of course it is; it is in writing in the own resources decision, which states:
	The European Council of 15 and 16 December 2005 concluded that the correction mechanism in favour of the United Kingdom shall remain.
	I have it here in black and white. It continues:
	However, after a phasing-in period between 2009 and 2011, the United Kingdom shall participate fully in the financing of the costs of enlargement, except for agricultural direct payments and market-related expenditure.
	The rebate as a whole will remain. It has not been signed away and will remain in full on the common agricultural policy across old and new EU member states and on all spending in the EU 15. It is right that we pay our share towards reconstruction in eastern Europe and it is in our national interest to do so. Not only that, our abatement is worth more in this budget round than in the previous one. We will get back 40 billion, which is an increase on the 34.5 billion in the previous round. Over the period, Britain and France will contribute roughly the same, which Conservative negotiators never achieved. The net contributions of France and Italy will rise twice as fast as ours.
	Under this deal, the EU budget as a whole has fallen below 1 per cent. of European Union gross national income, which is a saving of 160 billion compared with the Commission's original proposal. The deal that we agreed is 20 per cent. less than the last budget agreed when Conservatives were attempting to negotiate for the Government. In 1988, the then Government signed up to a deal that saw the budget grow by 17 per cent. over five years, and in 1994 they signed up to a budget that was shown to grow by 22 per cent. We have signed up to a budget for an enlarged EU that will grow by a mere 7 per cent., working in the national interest.
	We have secured a commitment to a fundamental review of the budget. The CAP, which was two thirds of the budget in the mid-1980s, will no longer be the largest part of the EU budget. The value of the CAP will start to fall in real terms from this year, from 55 billion to 51 billion by 2013. That has been negotiated by this Government. The budget now gives help to the new member states of eastern Europe, which need it most. It is in the national interest to pay our fair share of the cost of enlargement.
	I want to refer to some of the questions and contributions in this evening's debate. The hon. Member for Falmouth and Camborne (Julia Goldsworthy), who speaks for the Liberal Democrats, said that she wanted a debate on EU membership. She accepted that CAP reform was going the right way, but then she confirmed that she will vote against the Bill. The Liberal Democrats are, as always, trying to face two ways at the same time. She said that it would have been better to have had no agreement than to have the agreement reached in 2005, and other Opposition Members tried to make the same point.
	It was essential to have a December 2005 deal to allow the new member states to start preparing to use EU funds and to avoid the European Parliament, in the absence of such a deal, setting annual budgets under existing funding arrangements that, just to give one example, would have cost Poland about two thirds of its EU funds. Reaching no deal would have betrayed our support for enlargement. Perhaps the Opposition parties' support for no deal betrays their lack of support for enlargement.
	The hon. Member for Falmouth and Camborne said that Cornwall is still a very poor area. We are happy that it will continue to be supported. Cornwall and the Isles of Scilly will receive 430 million in convergence expenditure in the current financial perspective.
	My hon. Friend the Member for Luton, North (Kelvin Hopkins) made a number of points. I do not agree with all of them, but I was grateful for his contribution. He said that the CAP and structural and cohesion funds should be nationalised. On the CAP, the Government's policy is the abolition of market support and direct payments. On structural and cohesion funds, as set out in 2003, it is our policy that wealthier countries should be responsible for their own regional policies. SCFs should be targeted on the poorest and, as a result of the deal that we secured in December 2005, 250 per cent. of structural and cohesion funding expenditure will go to new member states.
	The hon. Member for Altrincham and Sale, West (Mr. Brady) succeeded in emptying the Public Gallery, and I lost the will to live at some points in his speech. He said that the House was having the chance to debate the Bill only as the deal comes into force. That is not the case: the own resources decision will not come into force until it is ratified by all member states, and I hope we will do so very shortly.

Graham Brady: The Economic Secretary says that the deal is good for Britain, so why did the then Chancellornow Prime Ministerseek to reopen the arrangements that had been reached once the deal had been agreed?

Kitty Ussher: He did not do that. The own resources negotiations that took place after December 2005 implemented the deal. The hon. Gentleman should not believe everything that he reads in the newspapers.
	The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) asked why the UK should bail out countries including those in the Balkans, Ukraine and Georgia. Why should we give up the abatement, he asked, when public finances are stretched? I support enlargementI am not sure whether Opposition parties doand I am clear that the investment in new member states will be to the economic benefit of the UK. It will facilitate trade. In 2006, British exports to the countries that acceded in 2004 had risen by 36 per cent. in the first full year after accession. That means jobs and growth in the constituencies of all hon. Members.
	I listened with respect and interest, as always, to my hon. Friend the Member for Great Grimsby (Mr. Mitchell), although I did not agree with everything he said. He made the point that the CAP would increase in real terms, but that is not the case. A lot of erroneous numbers have been flying around this evening. As I have just said, in 2007 the CAP will be worth 55 billion, but it will reduce to 51 billion by 2013 in the prices of that year. I also do not agree with my hon. Friend that we would be better off out. With 55 per cent. of our total trade being with the EU3 million jobs and inward investmentbeing in the EU gives us peace, prosperity and productivity growth.
	The hon. Member for Wokingham (Mr. Redwood)

John Redwood: Right hon.

Kitty Ussher: I do apologise. The right hon. Gentleman made, as always, an eloquent speech, but one that was economical with the facts. He said that there would be an additional 70 billion cost to the UK in this budget period, and the hon. Member for Wellingborough (Mr. Bone) made the same error. That is not the case. The numbers that the right hon. Gentleman mentioned are the total gross costsour total contributionand they do not account for budget receipts, and they certainly are not the additional costs of this agreement. The right hon. Gentleman tried to imply that the cost would be double the actual figure.
	The hon. Member for Wellingborough also said that UK trade with the EU has declined from 35 per cent. to 25 per cent. No, 55 per cent. of British trade is now with the EU.

David Gauke: The Economic Secretary disputes the figures given by my right hon. and hon. Friends for the additional cost of the changes to the rebate. What is her estimate of the additional cost as a consequence of the agreement deal?

Kitty Ussher: The deal is as set out by my right hon. Friend the then Chancellor, which is that the UK abatement will be disapplied by a maximum of 10.5 billion. There has been no change to that. I set out the estimated extra costs of the December 2005 agreement in an answer to a question from my right hon. Friend the Member for West Dunbartonshire (John McFall) on 20 December 2005.

John Redwood: Will the hon. Lady give way?

Kitty Ussher: I cannot give way. I have already responded to the right hon. Gentleman's points. I listened[Hon. Members: Give way.]

Mr. Speaker: Order. The hon. Lady is not giving way.

Kitty Ussher: I listened to the speech made by the right hon. Member for Wokingham. I have responded to the points he made and I have only six minutes to answer everything else.
	As always, I listened with interest to my hon. Friend the Member for Glasgow, South-West (Mr. Davidson). He asked why Luxembourg and Belgium came out well in the figures: that question was also put by Opposition Members. It is mostly due to administration spending; the EU institutions are physically located in those member states so they receive what looks like a larger share, but it is not comparable to the other figures.
	I was grateful to my hon. Friend the Member for Llanelli (Nia Griffith) for her good and well-rounded speech. Given the points made by Opposition Members, I think we should have had a few more such speeches.

Rob Marris: May I put to my hon. Friend the question I put to our right hon. Friend the Chief Secretary earlier? Does she agree that when it comes down to it there are two core issues, both of which are good for our country? First, are we in or out of the EU? We should be init is good for our country. Secondly, do we agreeI think we shouldwith the principle of redistribution of wealth to eastern Europe? I think that is a good thing for our country. Those are the two questions.

Kitty Ussher: I could not agree more. I shall now make my concluding remarks.

John Redwood: Will the hon. Lady give way?

Kitty Ussher: The right hon. Gentleman is very persistent but I am not giving way.
	It would be remiss of me not to mention the excellent speech of my right hon. Friend the Member for Rotherham (Mr. MacShane). He displayed his great knowledge of the subject and reminded us that it was Baroness Thatcher who, in this place, set out the case for enlargement. He urged Opposition Members to become a little more Thatcherite. That sounds like a good idea, because by voting against the Bill Members of both Opposition parties will, in effect, be voting to take money way from east European countries; yet the Leader of the Opposition, the right hon. Member for Witney (Mr. Cameron), said in the House on 23 February 2003:
	Enlargement of the EU is wholly welcome.[ Official Report, 13 February 2003; Vol. 399, c. 1023.]
	The Opposition support enlargement on one hand, yet they do not will the means for it to happen with the other. Is not that strange? We can only presume why.
	I presume that the Conservatives need to make money from the accession of eastern European countries to plug the 6 billion hole in their public finances

John Redwood: rose

Kitty Ussher: I am not giving way.
	Perhaps the Conservatives will use the money that would have gone to reconstruct the former Soviet bloc to pay for removing inheritance tax from millionairesthey have no other way of paying for it.
	The crux of the debate is that if the rebate was not disapplied for eastern Europe, the UK would have a windfall from the accession of eastern European countries. That is akin to a transfer from the poor to the rich. It may appeal to Opposition Members but it certainly does not appeal to me.
	The Conservatives say we could spend the money on doctors, nurses and teachers. I say that under the Labour Government we can invest in public services and do the right thing by Europe. It is in our national interest to do both. When eastern Europe prospers, so do we. It is good for Britain to be in a market of 500 million consumers. British exports to eastern Europe are rising dramatically. Our firms are investing there, and as they grow we shall grow, too.
	The shadow Chief Secretary got a bit carried away over the weekend and put out a press release saying that we were disapplying the rebate with nothing in return. Does he call enlargement nothing? I call it peace, prosperity and in our national interest.

Question put, That the Bill be now read a Second time:
	 The House divided: Ayes 312, Noes 215.

Question accordingly agreed to.
	 Bill read a Second time.

EUROPEAN COMMUNITIES (FINANCE) BILL (PROGRAMME)

Motion made, and Question put forthwith, pursuant to Standing Order No. 83A(7) (Programme motions),
	That the following provisions shall apply to the European Communities (Finance) Bill:
	 Committal
	1. The Bill shall be committed to a Committee of the whole House.
	 Proceedings in Committee, on consideration and Third Reading
	2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be completed at one day's sitting.
	3. Proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after the commencement of those proceedings or at the moment of interruption on that day, whichever is earlier.
	5. Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee and on consideration and Third Reading. [Mr. Watson.]
	 Question agreed to.

EUROPEAN COMMUNITIES (FINANCE) BILL  [MONEY]

Queen's recommendation having been signified
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a) (Money resolutions and ways and means resolutions in connection with bills),
	That, for the purposes of any Act resulting from the European Communities (Finance) Bill, it is expedient to authorise the charging on, and payment out of, the Consolidated Fund or the National Loans Fund of any sums which, by virtue of the amendment of the European Communities Act 1972 made by that Act, fall to be charged on or paid out of either of those Funds. [ Mr. Watson .]
	 Question agreed to.

COMMITTEES

Ordered,

Business, Enterprise and Regulatory Reform

That Richard Younger-Ross be discharged from the Business, Enterprise and Regulatory Reform Committee and Mr. Mike Weir be added. [Tony Cunningham , on behalf of the Committee of Selection. ]

Mr. Speaker: If it is convenient for the House, I shall take the similar motions 5, 6 and 7 together.
	 Ordered,

Communities and Local Government

That Martin Horwood be discharged from the Communities and Local Government Committee and Andrew George be added.

International Development

That Mr. Quentin Davies be discharged from the International Development Committee and Jim Sheridan be added.

Public Accounts

That John Healey be discharged from the Committee of Public Accounts and Angela Eagle be added. [ Tony Cunningham, on behalf of the Committee of Selection.]

PETITIONS

Police Funding (North Yorkshire)

Anne McIntosh: It is a great honour [Interruption.]

Mr. Speaker: Order. The hon. Lady is presenting a petition. Members should leave the Chamber quietly.

Anne McIntosh: I beg to submit this petition, which it is an honour to present in the names of Gareth Dadd, Derek Adamson and Mark Robson. It expresses their concern about the proposed police funding formula review and its impact on policing in North Yorkshire. North Yorkshire is one of the most rural counties in the country and rural policing poses one of the biggest challenges. That should be reflected by an increase in the police funding formula. Any proposed cuts in rural policing to divert funding to urban, Labour-controlled areas, would be totally unacceptable.
	The petition states:
	The petition in the name of the said Gareth Dadd and others shows that they fear that the proposed police funding formula will result in cuts. They wish to see their entitlement to fair and equitable funding for North Yorkshire.
	 Following is the full text of the petition:
	 [The Humble Petition of Mr G. Dadd of North Yorkshire County Council and Black Bull Inn, Thormanby, York, North Yorkshire and others of like disposition,
	 Sheweth
	 That they fear the proposed Police Funding Formula review will result in cuts of 10m, 16m, and 19m in years 1, 2, and 3 respectively will mean cuts of 300 Officers or a massive change to local Council Tax payers. We wish to see our entitlement to fair and equitable funding for North Yorkshire.
	 Wherefore your Petitioners pray that your Honourable House urges the Government to withdraw the proposed Police Funding Formula review.
	 And your Petitioners, as in duty bound, will ever pray, c. ]
	[P000056]

Post Office Closures (Shipley)

Philip Davies: On behalf of my constituents, I present a petition about their concern about the proposed closure of post offices in their local area. I support the petition wholeheartedly, and I pay tribute to my constituent Andrew Rowley, who virtually single-handedly collected in Shipley constituency the almost 3,000 signatures on the petition.
	The petition states:
	The Petition of the residents of the Shipley constituency and the surrounding area,
	Declares that the Petitioners are extremely concerned at the threat of closures and the removal of public services to the post offices in the Shipley constituency and believe that this is a pressing public service priority within the Bradford district.
	The Petitioners therefore request that the House of Commons calls upon the Government to recognise the importance of the post office to the local community and to other businesses in the Shipley constituency and to ensure that the Post Office honour their promise to maintain sufficient post offices and services in the Shipley constituency.
	And the Petitioners remain, etc.
	[P000058]

Rail Services (Northampton)

Sally Keeble: I present this petition on behalf of my constituents and those of the hon. Member for Northampton, South (Mr. Binley). It is about the train timetable changes in Northampton, which result in our losing our most important train of the daythe 7.12 am fast train bringing commuters to London.
	The petition states:
	The Petition of residents of Northampton and people who use the local rail services,
	Declares that there is serious concern about the proposal in the draft 2008 timetable to end the 7.12 fast train to London which is the main train service used by commuters who work in London.
	The Petitioners therefore request that the House of Commons urges the Secretary of State for Transport to reinstate the fast train service from Northampton to London at 7.12 am.
	And the Petitioners remain, etc.
	[P000062]

Ambulance Control Centre (Shrewsbury)

Daniel Kawczynski: I present to the House a petition with 16,000 signatures of my constituents who are concerned about the proposed closure of the ambulance control centre in Shrewsbury. One of my constituents, Mr. Steve Jetley, has worked tirelessly and feels so strongly on this issue that he has resigned his job to focus on the campaign. Many people have been trying to get as many signatures as possible, feeling passionately that Shrewsbury and Shropshire should retain our ambulance control centre.
	The petition states:
	The Petition of those concerned about the proposed closure of the ambulance emergency operations centre in Shrewsbury,
	Declares that the Petitioners condemn the proposed closure of the ambulance emergency operations centre in Shrewsbury, and are also deeply concerned about the possible loss of 16 fully trained ambulance control centre staff jobs.
	The Petitioners therefore request that the House of Commons urges the Department of Health to instruct the west midlands ambulance service to guarantee the continuation of control services in Shropshire.
	And the Petitioners remain, etc.
	[P000061]

SOUTHAMPTON AND BOURNEMOUTH AIRPORTS

Motion made, and Question proposed, That this House do now adjourn. [Mr. Watson.]

George Young: I welcome this opportunity to raise in the House my constituents' concern about proposals for a new flight path into Southampton and Bournemouth airports. NATSNational Air Traffic Serviceshas proposed additional controlled airspace from Newbury to Romsey, where aircraft may fly as low as 5,500 ft. Flights would be permitted between 5.30 in the evening and 9.30 in the morning. At this stage, the proposal would only affect inbound flights from next April, but if approved it could be extended to outgoing and therefore noisier flights. Indeed, the document says:
	Bournemouth outbounds may also be positioned in this space.
	There seems to be no scope for limiting the number of movements using controlled airspace once it has been designated. The proposals have been opposed by Hampshire county council, Basingstoke and Deane district council, 18 parish councils, the council of partners of the North Wessex Downs area of outstanding natural beauty, New Forest national park authority and the Campaign to Protect Rural England. I am grateful to Professor Johnnie Johnson and Alan Cox of Ashmansworth parish council and to councillors Horace Mitchell and Clive Sanders for their work in challenging these proposals.
	Despite those powerful objectionsmore than 500 were madeNATS has asked the Civil Aviation Authority to accept the proposals without amendment later this month. In a letter dated 2 October, the Minister, whom I welcome to the Dispatch Box, told me:
	the change sponsor must submit a report to the CAA who will consider the proposal against regulatory requirements. As appropriate, this might include seeking the views of the Secretary of State for transport on environmental matters.
	I will show that those regulatory requirements have not been kept to. This evening's debate is apt because at the end of this month the CAA is due to take a decision, in which the Minister has a role, and today the Prime Minister sought to underline his Government's environmental credentials.
	There are two questions. First, was the consultation process fit for purpose? Secondly, has the case for change been made? First, on process, what NATS did might have been appropriate some 20 years ago, when concern about environmental issues was lower, there was less commitment to consulting and getting feedback, and parish councils were less engaged in the planning process. We lived then in a less participatory society. But today, when there is a proposal such as this, that process is no longer fit for purpose. MPs should be offered a briefing in the House, NATS should write directly to parish and town councils, the document should be intelligible and conform to recent guidelines, and NATS should be prepared to put on roadshows for those who want them.

Michael Ancram: I congratulate my right hon. Friend on securing this debate on a matter that affects large parts of his constituency and only a small part of mine, around the villages of Ham and Shalbourne, although the people there are very concerned. Does he agree that the real outrage about what is happening is that whereas a local planning authority can, as has happened in such cases, stop noise pollution in areas such as Ham and Shalbourne in relation to glider launches or motocross, when something of this sort is proposed there is no local control at all over what happens?

George Young: My right hon. and learned Friend is absolutely right. There is less protection for what may be a noisier development than there is for the developments that he has just described. Indeed, he has put his finger on a point that was in the Government's White Paper, A better quality of lifestrategy for sustainable development in the UK. That proposed more openness, transparency and accountability in the decision-making process. I am grateful to my right hon. and learned Friend.
	In May, a document landed on my desk, entitled Terminal control south west airspace development, which I nearly binned because I do not regard North-West Hampshire as being in the south-west. It came with a letter dated 4 May, containing a list of organisations that the CAA had identified for consultation, which included MPs. It said:
	Identified organisations are requested to cascade this information to related groups as deemed necessary.
	In other words, responsibility for consulting the parish councils was subcontracted by NATS to local MPs. Although local authorities also had that obligation, none of my parish councils were notified by them, and NATS made no attempt to see if the cascade they asked for had taken place. Indeed, one parish councillor e-mailed me on 8 August, two days before the consultation was formally ended, saying:
	It was only by chance, nearly two weeks ago, that a local resident, on browsing the web, discovered that consultation was taking place. On investigation, it was clear that no Parish or Town Councils, local residents, or even Borough or County Councillors in the area north of Ashmansworth had heard of the proposals.
	The document flies in the face of the January 2002 Department for Transport guidance to the CAA, CAP725, which states that the formal proposal must include
	the options that have been considered, including the 'do nothing' option.
	But there was no assessment in the document of other options. That point was well made by Basingstoke and Deane borough council, which said:
	It would also aid our consideration of these proposals if you will please provide details of the alternative options that were considered by NATS. The CAA Guidance states that this information should have formed part of the original Consultation document. It would also be helpful to have further detail regarding the pattern and nature of the delays (current and anticipated) that are intended to be alleviated or mitigated by the proposed extension.
	That was written on 10 August and it got no answer, so it wrote again, saying:
	it is disappointing that we have received either no further information at all (as regards the pattern and nature of delays that are intended to be alleviated or mitigated by the Consultation) or inadequate information (as regards alternative optionsyour response dated 17 August 2007 lists five other options that were dismissedbut there is no reasoning as to why they were dismissed.
	On process, Hampshire county council was equally dismissive:
	We would also recommend an improved consultation process which sets out the alternatives and their implications for the matters of concern set out above. Until that time, the County Council is registering an objection to the proposed airspace extension.
	There is no appeal against CAA decisionsunlike the other planning matters to which my right hon. and learned Friend referredso it is particularly important that guidance be adhered to.
	The document was not only incomplete; it was rather difficult to follow. Hampshire county council, a beacon authority, said this about it:
	The County Council and its local government partners are not resourced to determine specialist technical impacts in areas such as aircraft noise impacts, and this is a deficiency in the consultation documents. Equally the local community has been provided with little notice of the consultation and we believe that this is also a serious deficiency of the process.
	Basingstoke and Deane council agreed:
	As mentioned in our 10 August letter, there is a very significant groundswell of local concern about NATS' failure to properly consult all Stakeholders and to produce a Consultation document written in plain English and readily understandable to those being consulted.
	There is a map on page 5 of the document, in the section on noise impact, which implies that the land between Minstead and East Woodhay is flat, whereas some communities are 800 ft up, and are therefore closer to the source of noise from aircraft flying overhead.
	The language used by NATS is at times impenetrable. Finally on the subject of process, the document is based on a rough estimate of the number of aircraft that might be directed down the new flight path, and on the current limited usage of Southampton and Bournemouth airports. However, both airports are scheduled for major expansion, and that fact is not reflected in the NATS assessment. Both airports currently have restricted night flying hours, which could easily change; in other words, flights might not stop in the new corridor at midnight.

Julian Lewis: May I bring my right hon. Friend's attention to a point that concerns my neighbour, my hon. Friend the Member for New Forest, West (Mr. Swayne), and myself? The national park authority's briefing note on the issue says:
	NATS have repeatedly claimed that the proposed airspace is not associated with...expansion of services at any of the regional airports. This is contrary to their presentations to local authorities and the aviation industry.
	NATS previously stated that
	one of the drivers for the airspace development is the anticipated growth at all the airports located in the South East region.
	There seems to be a certain amount of dissembling going on.

George Young: I am glad that I gave my hon. Friend a slot, so that his intervention could land safely. It was well made, and underlines the point that the new flight path, once granted, could cope with a greater volume of traffic than the one on which the consultation paper was based.
	Those failures of process would be enough in themselves to invalidate the proposal for a new flight path. The Minister should make that clear tonight. However, when that is coupled with the second and substantive pointthat the case for extending the airspace has not been madethe case for rejection becomes unanswerable. The consultation paper could not have been clearer:
	This airspace change aims to reduce the level of flight delays caused by an area of complex traffic interaction in the vicinity of the Compton VOR (a navigation beacon near Newbury).
	It continued:
	This situation causes the...airspace to be responsible for a high level of delay which in turn causes inconvenience... inefficiency...and...a negative environmental impact.
	Later on we are told that the delay attributable to that is 15,000 minutes. The consultation paper says:
	It is NATS' duty under the terms of its operating licence to address this situation and prevent excess delays being generated in the future.
	That is the case for change, but all attempts to get behind those figures were rebuffed. Ashmansworth parish council pounced on that weakness:
	The Consultation document claimed that the primary reason for the proposed changes was to minimise delay. We have requested a breakdown of these delays (such as extent and timing) to judge their significance, but have received no reply on this.
	In a telephone conversation with NATS, one of my constituents was told that NATS was concerned with delays in flights going to Heathrow and Gatwick, as well as in those going to Southampton and Bournemouth. Fifteen thousand minutes sounds a lot; but it is the total delay for the whole year spread over every flight, which equates to about 10 seconds per flight. The proposals' impact on such delays might be even less, as the new flight path would operate for only part of the day.
	That raises other questions. Could such delays be reduced in other ways, by altering the timing or sequence of flights? NATS has made no mention of technological developments that might well impact on aircraft spacing, allowing a higher density without changing the flight paths. Then there are some weasel words in the document. The proposals will not reduce the delay; they will
	reduce the potential for delay.
	We are not told by how much the delay would be reduced if proposals go ahead. On that shaky, unsubstantiated and unquantified edifice rests the whole case.
	By the time we got to the end of the consultation process, with the Stakeholder Consultation Feedback, there was no mention of delays. In that document NATS shifted its ground and instead said:
	This proposed airspace development is aimed at reducing complexity within the TCSW region.
	Ashmansworth parish council has pointed out that
	the recent response from NATS makes no mention of delays and refers only to a desire to reduce complexity, which appears not to be a valid reason in CAP 725, without giving any figures for present complexity or how it compares with other regions of the UK.
	If the benefits are doubtful, the disbenefits are clear, and many are indeed conceded by NATS. The consultation document says:
	The worst case B747 aircraft in the airspace produced maximum noise levels of between 62 and 69 decibels. B737-300s destined for Bournemouth Airport will use this airspace several times per day
	and they produce
	noise levels in the range 61-63 decibels. This...contrasts with what the Government have just said about Heathrow.
	This is what the Government said:
	One interpretation of this is that we could abandon the existing restriction on noise levels at Heathrow Airport of 57 decibels and above. But I believe it is right that we retain this as a safeguard for those most affected by aircraft noise.
	There are also the downsides of noise, loss of tranquillity and visual intrusion, and the impact in villages quite high up on the north Wessex downs from civil aircraft where there are none at the moment. The proposed flight path covers highly environmentally sensitive areasnot only the north Wessex downs but the Test valley and the New Forest national park. Those who represent the North Wessex Downs area of outstanding natural beauty have made it quite clear that:
	The proposed changes would be detrimental to the special character and qualities of the area.
	What should happen now? I believe that the Minister should tell the CAA that he is not satisfied with this exercise, and that NATS should go back to the drawing board. There is no urgency about this, and no critical issue of safety. I do not see how the Minister can just tick this one through. Basingstoke and Deane council has said:
	We would strongly recommend to NATS and to the Civil Aviation Authority that the Consultation be reopenednot only with a longer and more realistic time frame, but also with much more 'user-friendly' and understandable Consultation documents.
	Hampshire county council agrees:
	In our view, the need for additional airspace has not been adequately proven since the benefits seem modest, and alternatives should be considered fully, including 'do nothing' and local stakeholders fully consulted on all the options. In considering these factors, NATS and the CAA should be mindful of the probable uptake of the available airspace by increased numbers of aircraft movements.
	I look to the Minister tonight to restore the credibility and integrity of the consultation process, for which he is ultimately accountable, and to say that this is not good enough.

Richard Benyon: I should like to congratulate my right hon. Friend the Member for North-West Hampshire (Sir George Young) on securing the debate, and to thank him for the leadership that he has shown to me and to communities in my constituency such as Inkpen, Kintbury, Coombe and West Woodhay, and others that are alarmed by this proposal.
	I want to take just a few seconds to reaffirm some of the points that my right hon. Friend has made. The consultation was undoubtedly flawed. When I received the document, I contacted National Air Traffic Services and asked it to send the document to every parish council in my constituency that would be affected. In a letter to me of 24 May, it refused to do so. I then contacted the parish councils and told them how to access the document via the internet. The problem was that the parish councils and members of the public had access only to the online document, and they could not read the last appendix, which details the estimated altitude of flights over their villages. The councils were therefore denied the full information that they needed in this process.
	My right hon. Friend mentioned that, according to the response document, 56 per cent. of responses were rejections and only 9 per cent. contained no objection at all. In the final submission, however, not one of the original proposals had been even slightly tweaked. There has been no real explanation of why this extra airspace is needed at night, or why there is a need for more flights. If flights do not have to go over the area during the day, there must also be an alternative for night-time flights.
	My right hon. Friend made an important point about noise levels. The consultation document refers to the impact on people of the aircraft noise, which according to one appendix will be equivalent to that of a car travelling at 60 kph 7 m away. The document does not, however, distinguish between such noise occurring in an urban environment with a lot of traffic and in a tranquil, rural environment. Some of the villages that my right hon. Friend and I represent are also quite high above sea level.
	I hope that the Minister will address the conflicting responses that we are getting, including in a letter from the Secretary of State about the effects on Heathrow. The 57 dB limit seems very important to her, and follows detailed analysis. We are now talking about a minimum of 61 dB, rising considerably higher with certain other aircraft. I hope that the Minister will respond to those points.

Jim Fitzpatrick: I congratulate the right hon. Member for North-West Hampshire (Sir George Young) on securing the debate. Before I attempt to answer the points that have been raised, I would like to restate that sustaining economic growth and protecting the environment are at the heart of the Department's aviation policy-making processes. The policy that we set out in the 2003 air transport White Paper and reaffirmed in the 2006 progress report is in line with both the Stern report and the Eddington study. We recognise that a balance must be struck between tackling environmental challenges, enabling people to fly and allowing the industry to compete internationally. As a former distinguished Transport Secretary, the right hon. Gentleman will know that the role of any decision maker on airspace changes is to find the right balance in going forward.
	Turning to the ongoing terminal control south west airspace change development, I would like to make it clear at the outset that that proposal is still subject to the Civil Aviation Authority's independent airspace change process. As part of the regulatory process, the CAA might consider seeking the Secretary of State's view on environmental aspects of the proposal and also seek her approval for the change. As such, it would be inappropriate and premature for me to offer comment on the specifics of the proposal while it is still subject to the rigours of this independent regulatory review process. I apologise to the right hon. Gentleman for not being able to offer the more substantive response that I know he wanted me to make.
	That being said, I think that it would be helpful if I summarised the sequence of events to date and provided clarity on the process of airspace change. In May this year, National Air Traffic Services began a 14-week public consultation on proposals to extend a portion of airspace termed the terminal control south west airspace development. The consultation was undertaken in accordance with CAA guidance. I shall turn to the details of the CAA's airspace change process in a few moments, although I acknowledge that the right hon. Gentleman and his right hon. and hon. Friends have expressed strong views about the validity of the process.

George Young: I am sorry to arrest the Minister in mid flight, but would he be concerned if the guidance that his Department had set out, which needs to be pursued for proposals such as this one, had not been followed?

Jim Fitzpatrick: I will express my view about the guidance in a few moments. At the moment, the best I can offer are the words that I have just used: I fully acknowledge the strong comments of the right hon. Gentleman and his right hon. and hon. Friends about the validity of the process. That is clearly on the record this evening.
	Following a large number of replies received near the end of the consultation period, NATS extended the consultation into the middle of September. That was done to ensure that all interested parties were given adequate opportunity to comment. NATS then undertook an analysis of all responses, which was forwarded to all who responded to the consultation and has been placed on the NATS website. That analysis, along with all consultation materials, was then submitted on 21 September by NATS to the CAA for regulatory review. The CAA will give regulatory approval for the airspace change only if all regulatory requirements are met. I understand that the CAA's decision is expected in January 2008. If approved, the proposed change would be implemented on 10 April 2008.
	I have stated already that it would be inappropriate for me to comment on the specifics of the proposal at this stage, but I would like to take this opportunity to restate NATS's aims for the development. NATS stated in its consultation materials that the proposed development aims to enhance the safety and efficiency of air traffic control procedures. I know that the right hon. Gentleman will agree that aviation safety must remain paramount. The UK air transport industry, and NATS in particular, has an excellent safety record, and accident rates have stayed low despite a rapid rise in traffic levels, although we must never rest on our laurels. That is why NATS constantly reviews its airspace management and makes proposals for airspace changes where it believes them necessary. In the case of terminal control south west, NATS believes its proposals will reduce air traffic control complexity, reduce the work load on individual controllers, reduce delay and bring efficiencies to all aircraft passing through the region.
	It is important that I emphasise that the NATS proposal is not associated with, and will not enable expansion of, services at Bournemouth or Southampton airports or at any other airport in the region. I recognise, as I have already made clear, that the right hon. Gentleman has concerns about the consultation process, but the CAA, as owner of the airspace change process, has advised that the consultation process has been conducted in accordance with its guidance.
	I think that it would be helpful to set out the process for delivering airspace change. The CAA must manage the airspace to meet the needs of all users, having regard to national security and economic and environmental factors, while maintaining a high standard of safety. The process for making changes to airspace is governed by the CAA's airspace change process, known as CAP725.
	Following review and consultation, a revised version was published in March 2007. The new guidance provides greater clarity on the roles and responsibilities of an airspace change sponsor such as NATS and of the independent regulator, the CAA. It also provides greater detail about the activities of a consultation exercise and the environmental assessment of any proposed change. A change sponsor is responsible for developing and consulting about a proposal and ensuring that it satisfies and/or enhances safety, improves capacity and mitigates, as far as is practicable, any environmental impacts in line with the Department's environmental guidance to the CAA.

Richard Benyon: Does the Under-Secretary agree that, when something that is so important for communities throughout the country is happening, it should not be for Members of Parliament to cascade information? We are not experts. One had to get to page 40 before reaching the meat of the document. I am sure that NATS followed the regulations, but the regulations are clearly at fault.

Jim Fitzpatrick: Later in my text, I will refer to the fact that lessons are always learned from each process. The comments that the hon. Gentleman and his colleagues have made this evening are now clearly on record and I would be surprised if they were not noted.
	The CAA assesses a formal airspace change proposal against regulatory requirements, including environmental objectives, and either approves or rejects it. It is only when the CAA considers that a proposal might have a significant detrimental effect on the environment that it is required to advise the Secretary of State for Transport of the likely impact. It must also advise of plans to keep that impact to a minimum and to refrain from making the airspace change without first securing the Secretary of State's approval.
	Let me be plain: airspace changes are made only when it is clear, after consultation, that an overall environmental benefit will accrue, or when the airspace management considerations and the overriding need for safety allow for no practical alternative.
	The right hon. Member for North-West Hampshire and his colleagues also mentioned aircraft noise. I recognise that, locally, noise is a significant issue. That is why the CAA's revised guidance on the airspace change process includes substantive guidance on a range of environmental requirements, including noise, air quality, tranquillity and visual intrusion. In practice, it would be impractical to prevent widespread over-flying of areas of outstanding natural beauty or national parks in the south of England or elsewhere.
	I cannot offer comment on the terminal control south west airspace development while it remains subject to CAA scrutiny under its independent airspace change process. However, I emphasise that the consultation has been conducted fully in accordance with the CAA's guidance and that that guidance was recently reviewed and strengthened to provide clarity on roles, consultation activities and environmental assessment. However, as with all guidance, it remains a living document. That is why the CAA and NATS have welcomed comments on the current consultation to help their planning for any future such consultations.

George Young: I sense that the Under-Secretary is about to touch down. Surely if a national park authority makes representations against a proposal such as the one that we are considering, he would expect the CAA to touch base with a Department before ticking it through?

Jim Fitzpatrick: I have outlined as best I can the way in which the process works and that it is a matter for the regulatorin this case, the CAAto make the assessment. It has to satisfy itself that the change cannot be practically done other than in the way that has been proposed for safety reasons, or that it does not impinge on the environment, as I described. Given the number of objections that Conservative Members have outlined and that have been submitted to the proposal, I would be surprised if the CAA did not fully take on board the strength of feeling and the objections raised for scientific, environmental or other reasons. However, it is not my job to pre-empt or anticipate the conclusion of the review of the regulator, who has the expertise, scientific advice, knowledge and experience to make those decisions. The structures were put in place long before I came to the Department. I have confidence that they will deliver the right results for UK plc and take into account all the issues that were raised in the consultation process.
	I fully acknowledge the criticisms and concerns raised by the right hon. and hon. Gentlemen about the cascade process, and about other aspects of the consultation that they do not believe have been robust enough. As I said, I would be very surprised if those comments were not taken on board elsewhere.
	Finally, I want to repeat my reassurance to the right hon. Member for North-West Hampshire that airspace changes are made only where it is clear, after consultation, that an overall environmental benefit will accrue, or where the airspace management considerations and the overriding need for safety allow for no practical alternative. I am sure that the record of this debate will be noted by all the organisations involved in, interested in or affected by the proposed airspace change process.
	 Question put and agreed to.
	 Adjourned accordingly at ten minutes to Eleven o'clock.